Governance Drives Mission Relevance for Social Ventures
Stakeholder governance is not only critical for the management of social ventures; it’s also the driving force that ensures community engagement and mission relevance.
Is a lack of governance hindering your mission-driven organization?
It’s a common challenge I’ve seen at organizations across many sectors. It’s especially common in the early days of launching a new venture, when, to stay scrappy and nimble, an organization relies on ad hoc processes rather than slowing down long enough to implement a clear governance structure and standard decision-making policies and practices.
An organization without a formal governance structure may indeed be able to move quickly, but they can pay a big price over time. Some of the common pitfalls I’ve seen include a tendency toward group think, a decrease in trust and transparency as an organization grows, a lack of oversight to ensure that the organization fully engages stakeholders, and a focus on quick-win programs rather than the larger strategic change an organization seeks to accomplish.
I work closely with organizations to tackle these persistent governance issues. As I frequently put it to clients, an organization is much more than just one person, a community is larger than the organization, and a forest is more than one tree.
In short, we need to understand the broader landscape in which we operate. And governance helps to accomplish that.
Defining Governance
Let’s level-set by ensuring a common understanding of what I mean by “governance.” In simplest terms, governance ensures that an organization is meeting its stated objectives while also remaining true to its values.
For many organizations, Board members play a significant role in ensuring robust governance measures are in place. As “customers of the mission” the ideal Board brings unique perspectives to the organization and supports double loop learning: examining outcomes, questioning assumptions, adjusting plans. In short, the Board helps an organization to learn and evolve.
I have seen firsthand how deeply Boards can affect organizational decision-making. They ensure that an organization remains laser-focused on meeting the needs of stakeholders and drive trust and transparency through regular reporting, program evaluation, and strategy discussions.
Social Entrepreneurship
Effective governance is especially crucial in the realm of social entrepreneurship, which targets complex challenges that government and commercial enterprises may not currently address.
In social ventures, irrespective of the specific business model, two things are key above all: stakeholder engagement and community governance. Social ventures are not created to “save” communities; that perspective is a recipe for failure. On the contrary, they must be motivated by a mission to serve.
I prefer to think of ventures as ecosystems, more than discrete organizations.
Communities must be seen as a reservoir of talent, partnership, and resources. Accordingly, social ventures must do the hard work up front of deeply engaging stakeholders in developing both their mission area and identifying the tools the venture will use to push toward that mission, which include the organizational structure, business model, and governance. Ventures must have the perspective and patience to engage stakeholders in journeys of change.
The best social entrepreneurs bring deep expertise in scoping intervention spaces and crafting products and services that meet the needs of under-served communities. As such, social ventures must be more than an individual with a calling. Their governance structure formalizes a set of instructions that guide how the venture does its work. Structure lays the foundation for establishing expectations with those entities the organization interacts with: the team as well as its community, stakeholders, customers, partners, and regulators.
Governance structures should incorporate values and principles that are relevant and meaningful to the community the venture is serving. Ultimately, the structure develops trust through articulation and demonstrated adherence to rules and rituals.
The persistent challenge is to foster a journey that transforms communities and their relationships within and across sectors and governments to create new equilibria. Think of how completely different the end game is, compared to maximizing profits in the private sector: effective social entrepreneurs are designing their offering with the end goal of putting themselves out of business!
Most of us don’t start a venture planning for its obsolescence. But, think about it; if your goal is to address a gap — economic, social, environmental — then isn’t the desired outcome to fill that gap? To cure a disease, build an enabling infrastructure, or to enliven waterways?
Community-Based Governance
Social ventures are established to serve communities. It stands to reason that structure and business models should accordingly be developed with — not for — those communities. Through close partnership, communities can participate in creating, innovating, and sustaining change.
Some questions to ask stakeholders in your community to help catalyze long-term change:
- What decision-making contexts does your community utilize? Are there specific cultural requirements?
- Who are your stakeholders? What are their resource conditions? Interdependencies?
- Which sectors (business, education, non-profit, government), countries, and regions are involved in funding your venture? In the social change your mission envisions?
- Given your organizational structure, what are the legal governance requirements?
- Given your business model (e.g., are your paying customers different from your service community) who should be engaged in decision making or advisory processes?
Individual entrepreneurs can help to get things going, but it is a team and a community who will carry the effort forward. The greatest gift a social entrepreneur can give is to ensure the change the venture seeks can continue — and progress — without them. It may be unnatural to plan for obsolescence, but the unique nature of social enterprises demands it. By working one’s self out of a job, you can make the greatest contribution to long-term sustainability of community solutions.
… and then go start your next venture.
Interested in learning more? Check out this short video.
