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The Profit Distributing Social Enterprise?

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In a recent McKinsey article veteran researcher and business thinker Daniel Yankelovich reports that executives today in corporate America overwhelmingly agree that their businesses must not only make money, but must also serve the public good. Some 68% of executives believe that their business does both – only 48% of consumers agree with them.

It is clear that the ‘for profit distribution’ strategists are split over the role of ‘public service’ and ‘corporate social responsibility’ in the strategic mix. However the pendulum is clearly swinging in the direction of doing ‘public good’ as a core component of business strategy. The ‘profit distributing social enterprise’ is just around the corner – if it is not here already. Some would say that companies like SERCO, running everything from hospitals and prisons to railways and business support organisations, are already building this type of business structure – delivering ‘public good’ from a for profit platform.

What advantages will the third sector retain when more of the ‘for profits’ demonstrate a strong track record in providing public good? They might include:

  • the ability to release and channel the power of volunteerism in support of service delivery
  • the potential to attract philanthropic investments to fund the work
  • and perhaps most importantly a genuine passion for delivering the mission. A belief in doing it because it is the right thing to do; because it is an expression of what we value as human beings and not simply a preferred mechanism to increase return on investment to shareholder.

If we are serious about social enterprises challenging the dominant private enterprise model it is perhaps in these areas that strong management and leadership skills will be required.

Taking Established Social Enterprises to the Next Level

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Perth Concert Hall

S2S – the second annual Social Enterprise Trade Fair was held in Perth again this year. Blessed by sunshine and the usual diverse mix of delegates – bankers, bureaucrats and social activists – the event was highly enjoyable – and well worth the long drive.

I only managed to take in one workshop, “Striding Out – Taking Established Social Enterprises to the Next Level”. This featured three speakers, all of whom had experience of doing just that, either through acquisition (buying a business) or organic growth (winning more business and employing more people on the back of the surpluses created). The speakers were Mike Sweatman from the Edinburgh Bicycle Co-operative, Pauline Hinchion from FEAT Enterprises and Laurie Russel from the Wise Group

In all three cases the next level meant getting bigger. Only one of the presenters gave time to the possibility of staying small – working a niche as a way of moving to the next level. As someone who was brought up on ‘Small is Beautiful: A Study of Economics as if People Mattered’ – by EF Schumacher I am definitely not convinced that bigger is always the best route to better! Especially when ‘better’ means more effective delivery of a social purpose.

All three speakers emphasised the importance of good management in making the ‘transition to the next level’ and how much should be learned from the ‘for profit’ sector in this respect.

I don’t recall any of the speakers talking about the challenges of working with the key competitive advantage of the sector, namely the passion with which people, employees, volunteers and (some) funders subscribe to the cause. As a social enterprise gets larger how do you keep the passion burning?

Passion is the ‘kryptonite’ of the social enterprise. Management and leadership that nurtures passion and develops excellent management in pursuit of a social cause is what makes the third sector such a powerful force. My fear is that we may learn the wrong lessons from the private sector – about efficiencies and productivity – rather than how to inspire and lead passionate people.

There is a danger that ‘good management’ will quash what is excellent about social enterprise.

What suggestions can you offer about good management practices that help to keep the passion of social enterprise alive either when recruiting, acquiring or just in day to day management good practice?

How can you be rigorous in pursuit of your mission without being ruthless in your day to day management?

Management, Dragons and Apprentices – RealityTV

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It is no surprise that management and entrepreneurship ‘Reality’ TV (think ‘The Apprentice’ and ‘Dragon’s Den’) is so dark. Good people being fired on the strength of their performance on one task; entrepreneurs being humiliated by ‘Dragons’ because they are not experts in their product or service AND in how it should be marketed AND in the financial history and planned future of their cherished business.

The truth is that programme makers are simply not able to make good management and entrepreneurship ‘dramatic’ enough to get win viewing figures. So instead they focus on the dark dramas that so many of us love to watch unfold.

What impact do these programmes have on our perception of what entrepreneurship and management are as professions? If viewers believe that ‘Reality TV’ portrays reality then it is little wonder that neither are seen as ‘‘careers’ of choice for many and that that levels of entrepreneurship remain stubbornly low.

Exhortations such as ‘we will work until we bleed and batter the hell out of everyone else’ are hardly a clarion call for effective recruitment.

In my day to day work I regularly meet managers who are at their happiest when they are dealing with a crisis, damping down a fire, or sacking underperforming staff – because they really believe that this is what good managers do to make things better – a belief that may be fuelled, at least in part, by ‘Reality TV’. The impact that they have on organisational culture and climate is disproportionate.

The truth is that good management, progressive management, is about the day to day development of professional working relationships.

    • It is about coaching and developing people so that they contribute more fully at work.

    • It is about giving and receiving feedback (NOT ‘You’re a shambles! You’re fired!’).

    • It is about developing and sharing values that can lead to sustainable success.

    • It is about managing underperformance in a way that is rigorous and caring, but not ruthless.

And the same is true for entrepreneurship.

Both are about building effective teams, where individuals can express their unique personality, skills and traits in support of a team endeavour. But this is a slow, beautiful, human and creative process – more like gardening – than the high drama of the Reality TV shows.

This is the work of the Progressive Manager.

Coaching – Let’s reclaim an every day management tool!

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The profession of coaching continues to grow at an amazing rate. A search on google for coaching yields 78 MILLION pages. And as the profession develops, coaching becomes more and more complicated. There are professional coaching qualifications, codes of practice and ethics and a library of academic research on best coaching practice. Just to keep up to speed with developments in coaching seems to be a full time job.

However, coaching is not this hard. Many managers avoid coaching because of the complexity that has developed around it. The simple truth is that every manager should be coaching every member of their team, all of the time. All they need is to use a simple and practical coaching model and good interpersonal skills. And most improtasntly they must want their team members to do well. So much in coaching depends on intent.

Re-discovering coaching as a simple, quick and efficient way of building ability and developing excellent teams offer managers a straight-forward way to stand head and shoulders above most of their peers – who continue to believe that coaching is an expensive and usually outsourced development solution.

The Truth about Performance Management?

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Over recent decades the performance management industry has grown like topsy. Re-engineering, Balanced Scorecard, Lean Thinking, Strategy Mapping – there has never been such a choice of techniques to improve the performance of your organisation. Yet more often than not they simply don’t work. They cost a lot in both time and money…but just don’t deliver the highly anticipated and much needed returns.

So what does work?

In my experience significant performance improvements can be made by investing in the quality of line management, and in particular, excellent people management. In the vast majority of the organisations that I see three simple processes, well trained and efficiently executed provide the springboard for continual improvement of performance. These are:

  1. weekly, half hour meetings between the manager and each of their direct reports – 121s;
  2. regular use of effective and professional feedback, both affirmative (letting people know when they did something that you want to see more of) or adjusting (letting them know when they have done something that you do not want to see repeated);
  3. coaching each and every team member – all of the time – to help them to improve their performance.

Of course there are many, many more things that help to improve performance – but unless managers are doing these three things routinely and consistently well – then investment in any other approach is likely to be severely undermined by poor management.

So why are these processes so often over-looked?

Well firstly they are not very sexy! These are every day, almost mundane, processes that build trust, improve communication, enhance skills and add value to the organisation. To many managers who spend every day fighting fires and averting disaster this is most definitely NOT what management is about.

Secondly they sound like they will take a lot of time. The first excuse that I am usually given by a manager for not doing 121s is that they don’t have time, ‘I have 10 direct reports – you really think I can spend 5 hours a week doing 121s?’. Well the truth is that the 5 hours of 121s probably saves 10 hours of time spent responding to ad hoc requests for the managers time, or dealing with problems that could have been easily avoided if communication was better and trust was stronger.

The third most common objection is that feedback will cause conflict. It risks lifting the lid on Pandora’s Box and letting out all sorts of opinions, beliefs and personal prejudices that can only damage relationships.

And the final objection is that ‘no-one does this stuff around here’. Well exactly – no wonder the organisation is looking for tools and techniques that will help performance improve.