Values driven Value

I’m working on an idea that if for profit businesses are all about delivering value, then not for profit enterprises are about delivering on values. In 2012 and beyond we may see more of these two elements combining to bring about the values driven business. Money driven social enterprise if you will.

Consumers are looking for businesses that have sustainable business practices, that are ‘gentle’ on the environment, that utilise local resources rather than outsourcing everything overseas and are activity contributing to the positive health of community through their core business.

Since their invention, companies have focused on creating shareholder value as their primary objective. Consumers however are looking to those companies in an attempt to measure their shared values to see if they are the sorts of company their want to do business with. Shareholders too are looking at businesses to see if they ‘fit’ not just if they’ll fly financially. It’s not all about the mighty dollar any more.

For too long commercial organisations have tried to show how much they ‘care’ about the community by creating corporate social responsibility programmes (CSR) with the aim of offsetting some of their less positive activities (such as digging large holes in the ground, cutting down trees. filling our air with smog etc) or to emphasise their efforts to contribute to their community by promoting their charitable giving or the volunteering efforts of their staff. All of these things run along side their actual raison d’être. In the worst cases, these programmes are often add-ons and little more than lip service for some organisations. It’s something corporations have to be seen to be doing in order to be seen as good corporate citizens.

However the world is changing and consumers are asking for something more. It is not enough that businesses make good on their less popular actions by offsetting with ‘good works’. Consumers are looking for companies to change their business models so that their core business actions change. Make money but do it without destroying the planet and without destroying ‘my’ local community in particular.

In the past non-profit organisations were the ones which, by focusing on what is important to their constituents and stakeholders: their values, attempted to address the social imbalances of the world by helping to provide clean water, housing, medicine to the poorest of communities, protecting endangered species. At the same time, in part due to their use of the public purse, they are required to be come more efficient, more business like. Commercial businesses are behaving in their practices more like for-profits and in turn, commercial organisations are re-examining their modus operandi to determine what really matters and the way they make money; in effect becoming more like non-profits. What we’ll see is a merging of these two into a hybrid for-profit, for purpose organisation that is in the business of making money while at the same time attempting to address the key social issues of our time: poverty, health, inequality, education. Is this what is meant by social entrepreneurship?

More on this later. Comments?

Trading Places

A few times I’ve been asked by people wanting to change career direction whether they should take a job in the not for profit sector. I thought you might be interested in a few (there are lots more) things you’ll encounter if you make that choice. Love to hear your comments.

  1. It will mean working with lots of inspirational women! What is it about the NFP sector that attracts women? Cynically I could argue that they’ll put up with the lower pay scales more readily than men! However, they also work very hard and put the cause right out in front as a beacon of hope and energy. I love the women working in our sector, they are so inspirational! Some of the women board directors I’ve met are absolutely driven and fantastic mentors.Image
  2. It won’t be easy! A few hopeful but misguided souls consider a move to a nonprofit organisation will mean that life won’t be as stressful or busy as working for a commercial business. (I recall the job candidates who when asked why they’re considering a job in the NFP world answer “I’m looking to slow down a bit!” Not likely!) It might actually be a bit more stressful! You may have fewer resources including staff and money and you may be working on issues that create emotional stresses – like considering the needs of children living in poverty or those dealing with cancer or depression.
  3. It will be more rewarding! Almost certainly if you choose an organisation that follows a cause not led by the balance sheet, you will find it rewarding. How much more rewarding depends on how much you put into it and how much the cause matters to you.Image
  4. It will mean coming face to face with your own values! What matters to you? What gets you up in the morning? What drives you and makes you angry/motivated and ready to take on the world? Find the organisation that meets your values and you’ll have found your cause.
  5. It will mean asking others for money! If you are unsure if you are ready to ask others to financially support your cause, you may not want to work in the sector. Government funding is always limited and donor funding is often fickle so no matter what your role from scientist to receptionist, you will one day be asked to help out with fundraising. It’s not hard but it can appear to be confrontational. You’ll learn that by encouraging others to give, it’s a great way of connecting them with their values. A worthy cause indeed.

The profits of learning to let go…

Over lunch on a warm afternoon in Lygon Street Melbourne, I discussed with a friend the need to be able to extend your business beyond yourself, particularly for owner/operators who were their business.

I’ve witnessed several businesses with great potential that would have grown more successfully if the owner/manager could have imagined that business being implemented by someone else.

Where a business owner has had the insight to recognise that they can’t do everything themselves (and shouldnt try), then the business started to progress. Not to say its easier or less work to involve others I’ve seen the benefits of sharing the load. In addition when they’ve started to think about how they would structure/operate their business with a view to someone else operating it, a change takes place that opens up a number of opportunities.
Here are a couple:
1. If you have others working in your business you can share ideas and problems with them – you are not trying to work out everything yourself.
2. If someone else is working IN the business – driving sales, delivery customer solutions – you can be working ON the business, driving strategy and leadership skills, developing new ideas.
3. If you are the business how do you sell your business if you decide you want to move on? By building a business model that is transferable, that can be owned by someone else is what makes a business, in my opinion, a real business and not a one person consultancy. To test this, think of how a business named after the owner which has no other staff could possibly sell that business to someone else unless they have a repeatable business model that does not rely exclusively on the skills of the current owner.

4 Which brings us to the old chestnut of business plan – which should be considered with the future of the business in mind – not just today, but in 5 or 10 years. Dont you want everything you’ve worked for to continue after you’ve found new interests? (even if those interests involve mostly a pina colada and a beach). So building a business plan that allows the business to be owned and successfully operated by someone else is a must unless you’re happy to shut your door when you take down your shingle.
5. Release the Equity in your business: capitalise on all the work you’ve put into the business to date. This is your business equity. If your business were a house which you’d owned for a number of years in a rising market, when you were ready to move on, you’d sell it on to a new owner for a profit. You can set yourself up to do this with your business to release the accumulated equity if you build it with the future in mind. All that sweat and effort could turn itself in to a future profit. Isnt that something for which it’s worth sharing your vision?
Write and tell me what your vision is for your business. And for more info on planning and building a better business visit Alignments Australia and consider reading The E-Myth by Michael Gerber.