Managing a social enterprise is challenging, as it involves addressing business goals and social or environmental impact. This additional layer of complexity can often leave social entrepreneurs unsure about how best to lead their organizations effectively.
One of the primary challenges faced by social entrepreneurs is determining the right leadership approach for their organization. Two common approaches often create tension within the organization: focusing on impact and focusing on business. Those with a business-focused style tend to prioritize income generation, while those with an impact-focused approach prioritize the social or environmental mission of the organization.
However, it is important to recognize that both approaches are necessary for a social enterprise to succeed and scale its impact. Each approach offers distinct advantages:
- Focus on Business: Focusing on the business aspect of the social enterprise makes it more attractive to investors, which, in turn, generates greater economic resources. Additionally, this approach has the potential to facilitate faster scaling of the organization’s reach.
- Focus on Impact: On the other hand, focusing on impact allows the organization to understand better the problem it aims to solve. This understanding enables the generation of new ideas to maximize and scale the organization’s social or environmental impact.
Striking a Balance
The key to success lies in striking a balance between the two approaches. A social enterprise can benefit significantly from leveraging the advantages of both focus areas.
To achieve this balance, social enterprises should consider the following:
- Be Guided by a Clear Mission: A clear and concise mission statement helps guide the organization and its teams, irrespective of their preferred approach. When all team members understand the organization’s common goal, tensions between the two approaches can be effectively managed.
- Establish Impact and Business Indicators: Setting up indicators to measure both impact and business performance is essential. These indicators not only allow for the measurement of progress but also facilitate communication within the organization. They help demonstrate the contributions of each approach to the achievement of the overall mission.
A Successful Example of Social Enterprise
SolarInti, an Argentine organization providing energy and economic autonomy to rural and low-income families through solar devices, is an excellent example of an organization that strikes a balance between impact and business leadership. The founder, Pierre-Yves Herrouet, realized that a business-focused approach was needed to scale the organization’s impact. As a result, professionals with commercial experience joined the team, creating a mix of impact and business-oriented collaborators. However, all members of SolarInti are committed to the organization’s mission and understand the importance of measuring performance through various indicators.
Leading a social enterprise effectively involves finding the right balance between impact and business-focused approaches. Both approaches have unique advantages and contribute to the organization’s success. Social entrepreneurs must be guided by a clear mission and establish indicators that allow them to measure performance in both areas. Experimentation with different leadership styles is essential to identify the best approach for the organization.
By striking the right balance, social enterprises can maximize their impact and achieve long-term sustainability.