Or: What make a social enterprise?
How you define success should influence your pricing, distribution, packaging, employment practices, and more. Every aspect of your operations should point back to your definition.
We each have different priorities for our lives. We want different things and we value some things over others. For myself, being able to live close to my family and get intentional time with them each week is something that I value over having a larger home or the chance to live somewhere exotic.
When we choose our priorities individually, we are making decisions about how we use our time and our energy, what kinds of things we spend our money on and the kinds of people we build relationships with. When we find and define what our personal success looks like, it is easier to find the path that leads towards fulfillment.
As a business, making an explicit definition of success is the key to making an impact. By expressing and committing to a definition of success that goes beyond profit you can become a social enterprise.
One of the most common ways that social enterprises state their priorities are through statements of “multiple bottom lines.” For example, the ReStore, a social enterprise of Habitat For Humanity would have an ecological bottom line and a social bottom line in addition to the financial bottom line. If any one of those objectives are not being achieved through their operations, they will find another way of running the enterprise to make it work.
Specifically, the ReStore sells building materials that are left over from job sites, materials that would have otherwise likely ended up in the landfill. In 2014 the Canadian ReStores sold 30,000 tons of material that would have otherwise ended up in dumps.
The social goals of the ReStore center around reducing homelessness and poverty. This is a result of being a project of Habitat For Humanity. Habitat brings together teams to build houses for low income families that otherwise would be unable to buy a home. They facilitate this through requiring that the people who will own the home put in a certain number of sweat equity hours by volunteering with other Habitat For Humanity builds.
Habitat is unique in how they operate in that they only count the sweat equity as a down payment for the home, and they also require a reasonable loan payment schedule from the people who receive the homes. Typically, these loan payments are based on a percentage of family income, instead of based on the value of the mortgage. Through this they enable the homeowners to start investing in themselves and to escape the cycle of living paycheck to paycheck just to pay for rent.
This priority for providing high quality, yet affordable homes extends from the work that Habitat does. It also informs how the ReStore prices their recycled building materials, and how they decide what kinds of materials they will sell and what they won’t.
"For me strategy is about accomplishing your ultimate success and how you get there." - Michelle Periera
Typically, this idea of defining your success would be contained within a mission statement, but mission statements are often ignored. The idea of multiple bottom lines is a statement of priority that if your non-financial goals are not met, then your enterprise is not successful regardless what your financial position is.
This should naturally change what you measure and how you so about achieving those metrics. Once you know what your overall goals are, you will have to find ways of measuring your impact towards those goals.
I am a huge board game nerd, and one of the first things that I try to figure out as I play a new game is how the game counts points. European board games tend to have victory points, whoever has the most wins, and there are usually several different ways to earn victory points.
For example, Ticket to Ride is a very popular board euro board game. In this game, the players lay down tracks to connect different European cities to complete routes that are collected throughout the game. On each turn, the players can either pick up cards, they can discard coloured sets to lay the track, or they can pick up additional routes. Points are collected based on the track laid, the routes completed, or by having the longest continuous stretch of tracks.
One of the main tensions of the game is that if a player picks up a route but does not complete it by the end of the game, the points that the route would have been worth are then counted against them instead.
This tension leads to multiple other secondary tensions. There is often only one set of tracks that can go between a pair of cities, meaning that if one player takes them, all others who wanted to use that route must find a less efficient way around. This pushes players to lay tracks as soon as possible, but if they do, others might discover where they are headed and block them entirely.
Another secondary tension is that longer sections of track are worth more points but require lots of similarly coloured cards to be played. There is a risk that as a player collects the cards needed for the long section, they might lose other sections that are essential for their routes.
I addition to these secondary tensions, there is the option to pick up more routes, which allows the player to potentially earn more points, but increases the strength of the initial tension.
Every action a player takes is specifically to get them more points. If there wasn’t a penalty for incomplete routes, the players would likely act more slowly, and they would take more routes than they could possibly complete.
The tensions that exist while playing a board game like Ticket To Ride are present within a social enterprise and are based on their definition of success. If employees and managers have a distinct definition of success and metrics that they can compare to see if their impact is improving or falling, then they will change their actions based on those measures.
Just like the ReStore uses leftover building material to fund Habitat For Humanity programs because of their environmental mandate, your social enterprise can find methods to increase your desired impact. You just need to define what that is first.
As you decide what your enterprise calls success, keep it simple.