New guidebook lights the way for hybrid enterprises
As corporations focus on their broader social and environmental purpose, and not-for-profits incorporate social enterprises to generate revenue to achieve their social mission, leaders face the challenge of managing dual goals of profit and purpose.
A new guidebook ‘Managing Hybrid Enterprises’ developed by researchers at the University of Technology Sydney (UTS) in partnership with Wayside Chapel, will assist leaders and managers, especially from the non-profit sector, navigate these competing interests.
UTS Associate Professor Danielle Logue says these dual purpose businesses are referred to as ‘hybrid enterprises’ because they blur the divide between for-profit and not-for-profit, and have multiple purposes.
“Research is emerging globally on how to navigate multiple purposes, but this is mainly from the perspective of for-profit firms, and yet many social enterprises are emerging from the non-profit and community sector,” Associate Professor Logue says.
“We are bridging research and practitioner insights from Wayside’s new social enterprise, the Heart Café at Bondi. It’s a rare and valuable opportunity to work with an organisation in real time and to share these findings with the sector, community and policy makers,” fellow UTS researcher Dr Melissa Edwards says.
Wayside Chapel has a long history of providing programs and services to the most marginalised members of Sydney’s community. However, the Heart Cafe in Bondi Beach is its first venture into social enterprise.
The Heart Café provides an opportunity for disadvantaged young people to receive hands-on training and support via their Wingspan Project - an employment support program.
Jon Owen, Pastor and CEO, Wayside Chapel, says: “Wayside Chapel set an ambitious goal when we launched Heart Café – we wanted to establish a successfully viable café in the heart of Bondi Beach that provided employment opportunities to help young people break the cycle of disadvantage, all while staying true to our organisational mission and vision.”
“The partnership with UTS has provided a framework to navigate the complexities of the project and create a platform for success,” he says.
The guidebook draws on global research insights about hybrid organisations, and it features Wayside Chapel’s Heart Café as a live case study, to explore how leaders can structure their organisation to diversify their funding base, or establish a social enterprise.
“The guidebook investigates the challenges of managing organisational identity, being alert to mission drift, considering staff capabilities across both social and business fields, and traversing the inevitable tensions between social and financial goals,” says Dr Gillian McAllister from the UTS research team.
“Hybrids are not defined simply by their for-profit or non-profit status, but rather how they create and deliver different forms of value as a core part of managing their organisational mission and strategy,” she says.
The researchers highlight five issues leaders of hybrid organisations need to consider:
- Clarify organisational identity and brand
Trying to balance dual purposes can cause confusion inside and outside your organisation as hybrids don’t fit neatly into one organisational form or industry category.
Consider how the hybrid organisation relates to existing forms and industry categories to help stakeholders make sense of your identity and purpose.
- Managing the risk of mission drift
One of the biggest risks for hybrids is when stakeholders question the legitimacy of the organisation due to mission drift (mission drift occurs when financial goals overwhelm social goals, or vice versa).
This is a concern when legitimacy claims are different for various stakeholders. For example, the social mission is core to the customer, but financial outcomes are most important for sponsors.
- Consider staff capabilities
There are two main types of staff competencies for hybrids; ‘pluralists’ with extensive backgrounds in both social and business fields and ‘specialists’ who work only on the business mission or the social mission.
Hybrids need a mixture of both, although often pluralists are essential in being able to integrate practices, people and processes between the social and commercial goals.
- Operationalise competing interests
Special attention must be given to managing ‘integration processes’. This means developing decision-making protocols about what streams of work to integrate and what to separate.
Be flexible when managing tensions between the different streams of work. In general, adopt a ‘paradoxical frame’ – remember that a hybrid’s dual missions will and can be both contradictory and interdependent.
- Demonstrate and measure impact
Demonstrating that activities and programs are making a difference is a critical success factor in program delivery, so measuring impact means measuring the difference you make.
For a hybrid, tension arises when key stakeholders interpret this ‘difference’ in vastly different ways, so multiple methods of measuring and conveying ‘impact’ may be required.