Social Enterprise 101: Stakeholders and Shareholders

Why does social enterprise work?

Is it the goodwill naturally attracted by the organization? Or the inherent passion and purpose of the founders and employees? Maybe its the evocative  and emotional nature of the brand and marketing?

Whatever the individual causes of success and growth in the social enterprise sector, one aspect remains central: clear identification of stakeholders and shareholders. 

Stakeholder: an independent party with whom each of those who make a wager deposits the money or counters wagered (originally a gambling term)

Shareholder: a legal owner of company shares

In the history of business and economic development, ownership was diversified around the same time labor was divided. Prior to the divisions of labor, ownership was limited to a single resource and exchanged for other necessary resources. The interdependence of ownership was incredibly high as they recognized the value of engagement and trust in a community or ecosystem. 

Today, ownership is theoretically independent for a variety of reasons. Globalization creates an environment where partnerships are easier to turnover. Divisions of labor have economized interdependence, driving it to the extremes of independence and co-dependence (See independence and codependence). The massive expansion of industrialization has made a diversity of resources readily available with very little need for pursuit or negotiation. 

How does social entrepreneurship fit into this?

It reintroduces a more complete view of a stakeholder ecosystem. Here are a few of the primary areas:

Macro stakeholders - society, community, environment, economy

Micro stakeholders - employees, customers, suppliers, owners/investors

Meta stakeholders - governing bodies, regulators, media

Social enterprise balances the concentration of power and influence across the ecosystem. And for some reason, human beings RESPOND to balance. This is why news of a company investing profits in environmental sustainability, employee benefits, social causes or community development goes VIRAL. When an organization decides to prioritize a less powerful stakeholder, there is almost always a viral response of trust and goodwill. It highlights a powerful principle of ROI--investment is maximized when directed toward less powerful stakeholders. It is investment in a high growth potential sector. Investment in powerful stakeholders is saturated. While the returns are more consistent, they lack growth potential. "Riskier" investments in less powerful stakeholders are far more lucrative. 

The trend is catching because it is NOT a trend at all. It is a return to a logical and beneficial way of doing business and investments. Organizations are recognizing the high ROI for sustainability and balance. Communities are responding out of the awareness of profitability, not simply charity. Governments are creating new legal policy to benefit social businesses because of the recognition of societal equity.

Social Enterprises' ability to order and align the stakeholder ecosystem is a COMPETITIVE ADVANTAGE. 

3 Fatal Talent Management Flaws

Talent is the single greatest competitive advantage of 21st century firms. Relationships are the new currency. The ability to create, develop, maintain and leverage relationships is the leading indicator of success in today’s marketplace.

How is your organization handling talent? Here are 3 fatal talent management flaws to keep an eye on:

1. Downward Spiral

Hiring great people, tossing a little oversight their way, but doing nothing to develop, measure or drive performance is a great way to start a downward spiral. Especially if those great hires cost a pretty penny. Eventually, this downward spiral ends with termination for cost reasons, or departure for career development opportunities.

2. Uphill Battle

The uphill battle is snatching anybody and everybody and tossing them into a high performance culture with very little preparation. Some firms make a living on the backs of burnouts, developing holdover strategies to mitigate the risks associated with this model of talent management. Poor investment in acquisition can lead hires that do not match core values and culture, lack character, or do not demonstrate the necessary capabilities to perform assigned tasks. 

3. Internal Collapse

Hire great people. Drive excellent performance. Fail to manage or develop. This recipe begs for an unsatisfied workforce. Great people doing great work without any ability to scale, develop, promote or reward will ultimately end with internal collapse. This is exactly what it looks like: a pit. A few people or departments may climb out the other side by force of will or sheer luck, but most will collapse to the lowest point.

4. Sustainable Systems

Managing talent requires proficiency and excellence in each of the 4 pillars. In the same way you align your business strategy to your vision, values and purpose, you must also align your talent strategy to those same principles. Hire great people. Place them in quality infrastructure. Commit to their success, advancement and development. Measure, analyze and encourage high performance. 

That's the recipe for talent management that creates a competitive advantage. 

**Addendum: many have asked where "retention" falls into this framework. Retention is a lagging indicator. Successful retention emerges from implementation and activation of leading indicators (ie. the 4 pillars).

3...2...1... Lead!

Leadership is DEFINING, DEVELOPING and DELIVERING.

It’s defining expectations, worldview, values and purpose.

It’s developing competencies, goals and actions.

It’s delivering value on a moment’s notice.

If you are ready to take things to the next level--higher or deeper--start your countdown now. 3 Definitions. 2 Developments. 1 Delivery.

3 - DEFINING

1. Influence: is built through competency, credibility, capacity and consistency. This is the inherent power associated with an individual. It is the the “capital assets” a person represents--authority, finances, time, skills, etc. What is your power? Better yet, WHERE is your power? Is it centralized or diversified? All the rage is about diversified investments and portfolios. Is your influence diversified? Do you carry weight in all spheres of influence--work, family, community… yourself?
2. Movement: is the felt experience of influence. Think of it as the cash flow or liquidity of your leadership. Is it sitting stagnant? Do you at least have your influence in an interest-bearing account? Better yet… are you pushing your influence OUTWARD? Influence without movement leads to depreciation and decay.
3. Trajectory: the final piece of defining leadership. What is the end game? Influence and movement are great, but are they pointed in the right direction? Maligned influence and movement have led to some of the greatest atrocities humankind has ever experienced. Identifying trajectory is all about lagging and leading indicators. Understanding the power of long term investments over short term gains. Investments leaving a better world for our kids and our kids’ kids.

2 - DEVELOPING

1. Making Complex Decisions: in a globalized, socialized, polarized, super-sized economic environment, has the ability to make decisions ever been more vital considering the interconnected, interrelated dynamics involved? The ability to make informed, strategic and ethical decisions in “real time” is a core component of leadership competency. Sequential, waterfall methodology has been replaced with agility and flexibility. Decentralization in authority is now vital to the responsiveness of competitive industries.
2. Solving Complex Problems: innovation was once the key to growth. Now it is essential to maintenance. The pace at which modern business changes has made adaptation a necessary component of many industries and firms. Leaders must be able to solve problems created by competitors, industries, markets and themselves.

1 - DELIVERING

1. Value: The 3-2-1 countdown always ends with one conclusion: LEADERS DELIVER VALUE. They deliver value to their families, teams, organizations and communities. Leaders deliver as much value on the production line as they do in the boardroom. Leaders elevate the talents, hopes, dreams, perspectives, opportunities, ethics and spirits of those around them. That’s the litmus test. Do you deliver value from the Starbucks line to the elevator? From the elevator to the boardroom? From the boardroom to the living room?

That’s the LEADERSHIP COUNTDOWN.

Resuscitating Your Leadership

Flatline.

We’ve all been there. When the demands exceed our capacity. When the stretching leads to flat out ripping us in half. When bending ends up breaking. When we reach into our bag of tricks right when we need it most… and come up empty.

After wiping away tears, picking up our pride or cleaning up the mess (whatever the outcome), we find ourselves with that universal question: “What now?”

It’s time to bring our leadership back to life. And it’s funny how that process works. The process of resuscitating our leadership is eerily similar to the process of dealing with grief. Grief, a cause or occasion of extreme stress and sorrow, and the stages we walk through, interestingly enough provide us an inverted roadmap for resuscitating joy. Let me show you how it’s done by running the five stages in reverse…

The 5 Stages of Resuscitating Personal Leadership

Stage 1: Acceptance

Time to deal with the reality that parts of your leadership are dead. This first stage actually provides a certain amount of relief. Some of the burden is lifted by the ability to look into the eyes of those following and counting on us, or simply into the mirror, and recognize what’s not working.

Stage 2: Depression

Absorbing the pain of dead leadership is the next step in this journey toward revival. What has the impact been on you personally and those closest to you? What has it cost your company, your family, your relationships? Hold this pain close as it will become a driver to take you through the final stages.

Stage 3: Bargaining

Bargaining is all about counting the costs. This vital, middle stage will have you straddling the line. On one hand, you can remain dead, with the pains identified in the previous stage, which does have the benefit of familiarity. On the other, you can make an investment and sacrifice to stick with it. This is accompanied by the unknown and the costs of change and growth--investment in training, changing jobs, developing new habits, giving up coping mechanisms, etc. Either direction will cost something. It’s time to measure and analyze.

Stage 4: Anger

This is where you provide the motivation, desire and drive to pursue making your leadership come alive. Whatever vision, mission statement or picture of a preferred future is inspiring you, keep that close. Leadership is hard. Making complex decisions is difficult. Solving problems is challenging. Stir up this fire when the journey gets tough.

Stage 5: Denial

Party time! Celebrate that you have the opportunity to DENY the dead parts of your leadership. Whether it has been five months, five years or 50, you now get to reject the failures, incompetencies and insufficiencies that have ruled your reality. You have the privilege of laying those things aside and picking up a new leadership identity formed through the trial and fire of facing it head on. Celebrate that freedom with friends, family and those close to you. It’s a brand new day!

Now, hook up the paddles and get to work!