Social Enterprise Conference October 30-31, 2006 Social Enterprise Business Planning Workshop: Organizational Readiness Presented by: Kim Alter Virtue Ventures LLC

Culture is the # 1 Reason Why Social Enterprises Fail "But we are a nonprofit! We're not supposed to make money!" "Socially oriented practitioners (and their sympathizers) are raised by experience and training to distrust money, business, and capital. We develop a mind-set that views money as evil. Grow up. Money is valueless; it's what people do with money that counts. Your job is to get as much of it as you can so you can stay in business, hire people in need, pay a good wage, contribute funds to your program, and stabilize your community. Greed may not be good, but money is. After all, there is no glamour in poverty. Go out there and get your piece of the pie and then feed it to the masses. If you aren't comfortable with that idea, don't start the game." New Social Entrepreneurs: The Success, Challenge and Lessons of Non-profit Enterprise Creation, by Jed Emerson and Fay Twersky

Mission – Money Matrix Low High Low $$ Mission  $  Mission  $$$$$  Mission  $  Mission  $$$$  Mission

Challenge Financial Viability Social Impact

Problems with Duality… Confusion Indecision Mistrust Conflicts Culture Clashes Cognitive Dissonance ©PeterSCrosby

Cognitive Dissonance...

Cognitive D i S s Ona n c E...

Culture Clash Social Sector 1. Social impact 2. Complex - difficult to measure 3. Lack of precision 4. Process oriented 5. Risk adverse 6. Bureaucratic / slow moving Business 1. Profit maximization 2. Concrete – straightforward measure 3. Precision and accuracy 4. Results oriented 5. Risk-taking 6. Agile / quick to respond

Organizational Issues Fear of losing sight of the mission Resistance to and fear of change

Organizational Strategies Inform and educate internal and external stakeholders Communicate the vision by a factor of 10 at all levels! Get buy-in (bring critics to the table) Build and present clear and consistent vision and values Articulate motivations and expectations Create transparent process

Board Issues Challenges why some board members preside Low risk tolerance--nonprofits have little financial cushion Concerned about perception--Public trust Tax status and liability--UB income

Board Strategies Cultivate champions at the board level Set up and enterprise team/committee Tie board members into the process at the beginning Bring in outside expertise Integrate social enterprise planning with other strategic issues Purge deadwood

Management Issues  Time  Relinquishing control  Threatened by new “businesslike” culture  Skills and capacity  Focus / priorities

Management Strategies  Executive director provides resources and support  Set up internal “social enterprise team”  Present process plan and business plan  Strategic/value alignment  Coordinated business model  Transparent process, open communications  The “right people on the bus”

Staff Issues Fear of job change or redundancy Inability to see the big picture Comfortable with status quo

Staff Strategies Understanding and addressing staff’s fears "Incentivizing" change Providing training, resources, support and recognition Involving staff in the process Communicating down

Managing Cultural Tension Holistic SE vision Culture where both business and social mission are valued Adaptive culture Transparent process Structure and integration that facilitates healthy communication, respect, etc. corporate strategy and business model Balance and equilibrium