Business Operations

Core Drivers of Success: Audacity

Introduction

Leadership audacity was thrust into the spotlight as a key element of success in business by the publication in 1994 of Built to Last: Successful Habits of Visionary Companies, a seminal book on the characteristics that set “visionary” companies apart from others. Authors Jim Collins and Jerry Porras discovered that strategic and emotionally compelling “BHAGs” (Big Hairy Audacious Goals) serve as a focal point of effort and act as a clear catalyst for team spirit.

Collins and Porras were referring to BHAGs focused largely on systems-change over at least a decade, which is a difficult timeframe for many resource-constrained social enterprises to contemplate. Nevertheless, social enterprises operating at scale benefit from the same audacious style of leadership.

Audacity manifests in many ways for social enterprises, including the following key areas:

  • Solution-driven goal setting. Like the BHAGs in Built to Last, social enterprises that are audacious goal-setters tend to focus on the end-state, or outcomes, they are seeking.
  • Fearless partnering. Successful social enterprises punch above their weight, striving to develop business relationships with much larger public and private sector buyers.
  • Unconventional thinking. Social enterprises operating at scale are pioneers in the effort to apply market-based solutions to intractable social problems. Our case study subjects include many notable examples of audacious business models that defy convention in blending “mission and margin.”

 

Solutions-Driven Goal-Setting

All high-achieving social enterprises set ambitious goals. Fewer set the kind of audacious, end-state goals that characterize the BHAGs featured in Built to Last, like Henry Ford’s promise in 1909 not only to build great cars, but to “democratize the automobile.” Orienting goals to the delivery of a solution is what makes BHAGs so motivating; the prospect that something so transformational might actually be accomplished.

For many social enterprises, particularly nonprofit organizations, solutions-driven goals achieved over decades can be difficult to contemplate, in part because of resource constraints. As Sir Ronald Cohen, chair of the G8’s social impact investing taskforce has noted, over the last 25 years, 50,000 U.S. businesses have successfully surpassed $50 million in sales, compared to just 144 nonprofits.5 To be sure, size is not a goal in and of itself for most nonprofit organizations. Impact is more important. Nonetheless, with more limited access to the resources that enable for-profits to scale, social enterprises tend to think three to five years ahead, not a decade or more.

The 10 social enterprises we studied for this report include two particularly notable examples of audacious goal-setters: Human Technologies Corporation (HT) and Goodwill Central Texas (GCT). HT is committed to nothing less than changing the disability system—a journey that began in earnest in 1992 when the board embraced the teachings of John Durand, a leading advocate for “affirmative business,” or the idea that disabled workers should receive the same benefits, pay, and conditions as non-disabled co-workers and supervisors. HT’s ambitious thinking led the organization to begin paying all employees the New York State minimum wage or above in 2005.6 The effect was immediate and dramatic. Counter-intuitively, there was a 17 percent drop in employee productivity, driven primarily by non-disabled, disaffected workers laboring alongside colleagues with disabilities. Disabled workers also became more abundant for HT, suggesting the sub-minimum wage had been a significant disincentive preventing capable people from working. And culturally, by aligning all employees, HT found that the priority quickly turned to the welfare and growth of the organization, rather than simply pushing product out the door.

At Goodwill Central Texas (GCT), longtime CEO Jerry Davis asked a simple question: was it possible to achieve scale by solving the entire social problem that GCT was committed to addressing in its service area—unemployment among people who were disabled, had a criminal history, were homeless, or lacked education? This deep process of reflection, aided by the results of an evaluation of GCT’s work by researchers at the University of Texas, has resulted in a goal of employing 100,000 people over 10 years, directly and through partners. The goal, in turn, has inspired a number of concrete and highly impactful strategic changes: setting aside revenue for continuous innovation; extensive outreach to local employers to ensure alignment with growth industries; a focus on education and training, including establishing a charter school for adults working towards their high school diplomas; and a more active role in policy advocacy.

The Cara Program (TCP) is an example of an organization that—having set an ambitious target of doubling the number of jobs created in the five years ending 2017—is moving towards an even more audacious, solutions-driven goal. “How much difference are we really making when hundreds of thousands more are in need, in Chicago alone?” the board is asking. “We haven’t scratched the surface,” says TCP’s founder, Tom Owens. “We need to be able to describe the The Cara Program’s mission as a fight against extreme poverty.”

 

Fearless Partnering

Social enterprises and their leaders are passionate about the impactful services they provide and relentless in developing business relationships with much larger public and private sector buyers – advocating not only the commercial value of what they offer, but also their ability to help business partners achieve their social and community objectives. Put another way, fearless partnering is the way that anchor client relationships are put into practice.

Women’s Bean Project, the smallest social enterprise we studied, became part of the Empowering Women Together initiative at Walmart.com in 2013, a corporate-wide commitment to sourcing $20 billion from women-owned businesses for U.S. stores over five years. As a result, WBP has been subject to food safety and ethical sourcing audits and has significantly enhanced its logistics capacities to the point of being granted the privilege of becoming a “drop-ship” vendor. WBP can now ship Walmart.com orders directly to customers from its own warehouse.

2015 was be a breakout year for HT, due primarily to a new, flagship relationship with the U.S. Department of State. The contract was secured in a competitive bidding process (i.e. outside of the AbilityOne program, which provides procurement preferences to businesses employing people with disabilities). The partnership has expanded from one to four offices at the department and is expected to account for just under 50 percent of top line revenues for HT in 2015 and could grow to two to three times that amount in the near future. The contract is a high-stakes engagement for HT—providing 12,000 security guards around the world with clothing HT has touched directly, either in the production or packaging cycle.

 

Unconventional Partnering

Social enterprises operating at scale are pioneers in the effort to apply market-based solutions to intractable social problems. Our case study subjects include many notable examples of audacious business models that defy convention in blending “mission and margin.”

Center for Employment Opportunities (CEO) has developed a widely admired model for providing transitional jobs to men and women with recent criminal convictions, and in the process provided access to economic opportunity and reducing recidivism. CEO’s audacity can be seen in its commitment to disciplined replication at every one its 12 sites, including fidelity to specific programmatic elements that have been proven to work: emphasizing referrals from parole probation officers, paying clients for the work they do every day, training workers in life skills prior to joining a work crew, and matching clients with job coaches for help securing unsubsidized work.

Bank of America’s Support Services Division is audacious in its design. There is no difference between Support Services and any other line of business at Bank of America. Employees are provided the same benefits and wages and are expected to meet high standards for quality. In the 25 years since Support Services’s creation, neither MBNA nor Bank of America has touted the success of the division, or even shared its story externally, until now. Information is passed on internally by word of mouth, allowing Support Services to prove itself through the work alone. Support Services exists to provide back office and logistics support to Bank of America. The department does not work with outside clients and would not exist if it could not provide cost-saving, high-quality services to internal clients.

 

Conclusion

Social enterprises are not alone in benefiting from audacity. As the book Built to Last makes clear, audacity also distinguishes the most successful traditional businesses from their less visionary peers. For social enterprises, the importance of audacity is another reminder that, in a competitive market environment, it is essential to operate like any other high-performing business. The following findings provide additional insight.

First, audacity is grounded in deep, internal reflection. Many of the most audacious goals and business models emerged from case study subjects looking inward. Goodwill Central Texas arrived at the ambitious goal of creating 100,000 jobs and related strategies by responding very intentionally to research from the University of Texas questioning the organization’s depth of impact.

Second, audacity requires both a “spark” and a “web” of leadership. CEO’s might be the most visible embodiment of audacity—and more often than not the providers of a visionary “spark”—but they are just one part of a web of leadership, extending to all employees, the board, funders, and other community partners. HT’s former CEO, Rick Sebastian, balanced a bold style of leadership with a significant investment in the reconstitution of HT’s board, which turned over entirely and emerged as an integral driver of the organization’s growth.

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