Mission, Model, Measurement and Management: The four M’s of a Sustainable Social Enterprise
8 February 2018 at 9:05 am
There are four key building blocks of a sustainable social enterprise, writes Anthea Smits from The Difference Incubator.
Social enterprises in Australia seem to be popping up left, right and centre. But let’s cut to the facts and ask the hard questions, how many of these are becoming non-grant reliant, sustainable enterprises? And how can you build one too?
At The Difference Incubator (TDi) we get asked all the time what makes a successful social enterprise.
Is it a large grant? Working for a great cause? Or maybe creating an exciting brand? Some people even think that it’s all in the legal structure!
Over the past seven years here at TDi, we’ve worked with more than 400 mission led-enterprises, and here is what we have found: there are four key building blocks of a sustainable social enterprise and they are mission, model, measurement, and management.
And while these building blocks are not as elusive as one might think, you still have to put in the work.
It’s too easy to get caught up the in the big picture of what your social enterprise can achieve, without drilling deeper into the less fun parts of how it will all work. To truly build a successful social enterprise we need to get our heads out of the clouds and do the hard work.
Let’s unpack these four key concepts, dig into why they are so important for a sustainable social enterprise, and get to work.
When we work alongside mission-led enterprises, both through our Two Feet Accelerator and consulting, the very first thing we do is empower them to get clear on their mission.
A mission speaks to why an organisation exists and what it hopes to achieve. It’s critical to push organisations to reflect on and clearly articulate their mission early on.
Having a strong and clear mission is generative, it is a starting point. It forms the basis of what you are doing to produce a certain type of business. As you come back to your mission at later points it can also play a restorative role, reminding you of what you set out to do and providing a prompt about the non-negotiables for you and your enterprise.
You’d be surprised how many businesses we’ve seen whose missions, unfortunately, don’t line up with what they are actually doing.
And what happens if you don’t get clear on your mission, and integrate it into the key decisions that you make? Mission drift, where people end up doing the opposite of what they say.
While this might sound like the worst case scenario, this threat is very real.
When it comes to the business model, a lot of people often believe that access to capital or resources is their main problem. I would argue that a model with the capacity to carry capital is often the real issue at play.
If we build and test models that can carry capital they will attract investment capital. I’m not just talking about a good spreadsheet with no red numbers, I’m talking about making sure the key pieces of a business model all fit together: desirability, feasibility, and viability.
Desirability: Do you have a product or service that the market wants to buy? Does it add value to a customer segment?
Feasibility: This covers all the moving pieces that go into making a business work, and what activities, resources, and partners are required to do so.
Viability: This is all about the numbers and making sure that they stack up financially with feasibility and desirability.
It’s important to note that it often takes a number of tries when it comes to modeling. You’ll need to identify the assumptions that went into your model, test these assumptions, then redo your model before you will land on something that sticks. Want one of my biggest pieces of advice? Fall in love with your mission, not your business model. Your model can and will change as you test and develop and grow.
You can have a great business model, but then if it is not achieving its mission, who cares.
A key part of building a sustainable enterprise that both does good and makes money is the doing good part. This is where measurement comes into play.
Measurement plays a central place in helping organisations to move from good intentions to reliable outcomes. Without measurement how can you claim the good you are supposedly producing in the world? How can you prove it?
Figuring out how you create change in the world and how to measure this change is critical. For us at TDi measurement is just as important as having a viable commercial model.
Furthermore, measurement, when done well, can help de-risk a business and significantly increase the chance of delivering on the desired social or environmental outcomes.
It’s no surprise that people often make or break a business.
At TDi we find that the most sustainable social enterprises are those with both a passionate and capable management team. This powerful combination means that when things don’t go to plan, the team are equipped and agile enough to adjust and react well to anything that comes their way.
There are three key skills that make up a capable management team and they are technical know-how, marketing, and finance.
These three skill areas also circle back to the businesses model and play to the key traits of a sustainable model – feasibility, desirability, and viability.
Sustainable business models are hard work and come with deep thoughtfulness, a clear mission and a commitment to be accountable for your outcomes. They are built by people who not only have a great idea but also are prepared to build that great idea into a reality.
If you are struggling to know what to do next or what area of your social enterprise needs the most attention, I would encourage you to take a look at the four M’s. From here assess which one needs to the most attention, roll up your sleeves, and dig in.
For more support check out our Two Feet Accelerator.