Author: QnA

Dear Consultant,

I work at a non-profit organization that works with an at-risk community of teenagers.  Over the last four years we’ve been helping our clients sell artwork through an online store to raise money for a number of our initiatives.  Recently, one of our funding agencies has told us that they would be willing to offer us funding if we decide to turn the online art sales into a “social enterprise.”  What exactly does that mean?  Isn’t that what we’ve already been doing?

A social enterprise is a business initiative that derives most of its funding from the sales of products or services and where the business operates with the intent to create social value, not just profit.

Social Enterprise can mean a variety of things depending on the situation.  Many people in the for-profit sector view social enterprise in terms of corporate social responsibility initiatives, including philanthropy and community engagement projects.  Others in the non-profit sector think about social enterprise simply as earning money from people by selling products or services.  But a fairly all-encompassing definition of social enterprise can be succinctly stated: a social enterprise is a business initiative that derives most of its funding from the sales of products or services and where the business operates with the intent to create social value, not just profit.

To be clear, a social enterprise can be a for-profit organization but it doesn’t necessarily need to be.  Many non-profits seek to make money from the good work that they do, to diversify their sources of revenue away from donations and grants.  There is a growing group of non-profit organizations who recognize that some or all of their operations can be sold to some kind of target market in a way that is competitive with other businesses.  Generating revenue in this way offers a degree of financial self-sufficiency that many non-profits are not used to.  Similarly, businesses in the for-profit sector frequently create value for their customers, which is why their customers purchase their products and services.  The difference between a social enterprise and a regular business is that a social enterprise also creates social value.

Creating social value refers to helping groups that are marginalized, underprivileged or don’t have a strong voice for self-advocacy

So what is social value?  Creating social value really comes down to explicitly trying to helping people in need.  Sure a tax accountant helps her clients who are in need of having their tax returns filed, but that is not what we’re talking about here. Creating social value refers to helping groups that are marginalized, underprivileged or don’t have a strong voice for self-advocacy.  This includes environmental issues, as many environmental issues are an antecedent for social problems including drought, disease and natural disasters.

Here is a quick way to visualize how social enterprises fit into the traditional sectors that we usually think about.

Social Value and Monetizability

A social enterprise is frequently competing with both the non-profit and government sectors, as well as the for-profit sector

A key thing to think about in this diagram is that the sectors overlap.  A social enterprise is frequently competing with non-profit and government organizations that are trying to create social value for the public good, but because a social enterprise is also trying to make money from their products or services, they are often competing directly with other for-profit businesses.  Monetizability refers to the likelihood of an organization to make money from a product or service, so highly monetizable products or services are frequently already highly sought after by the for-profit sector.

In your case, selling art online would be a social enterprise if you’re able to cover your costs and if you’re creating social value for your teenage clients.  If after careful consideration of all of the expenses related to your art sales, including hours of effort of salaried workers, the revenue is higher than your expenses or if you have a plan to increase your revenue before taking too much of a loss, then you’re successfully operating a social enterprise.  This is an entrepreneurial pursuit that involves someone championing the social enterprise as though they are an entrepreneur.

Dear Consultant,

I am a Development Manager for a small software company.  My team is growing and one of my challenges is recruiting qualified software developers who fit into our culture.  Do you have any guidance on how to create a recruitment process for our team?

Never assume your job is attractive to candidates, ensure that you communicate just how attractive it is

Recruiting for your organization requires thought beyond simply screening applicants and selecting the most appropriate candidate, it also requires a marketing and competitive strategy.  The pool of talent that exists for a skill job is often sought after, so organizations vying for appropriate candidates are in competition with each other.  Never assume your job is attractive to candidates, ensure that you communicate just how attractive it is; sell your job and organization just like a business would sell a product or service.

 

Your recruitment strategy should have answers for the following:

1)      What is your budget for promoting this job?

It is not always free to promote your position.  If you have a particular talent pool (target market) in mind, communicating to this group may require a marketing budget.

2)      What promotional mediums do you have available to you? 

Depending on the particular talent pool that you’re targeting, you may already know how you will promote the job posting, but think about expanding upon the traditional modes of promoting a job posting.  Some examples for promoting a job posting include:

  • Your company website’s “Career” section
  • LinkedIn
  • Other job posting websites
  • Newspapers
  • Headhunters and recruitment agencies
  • Internal referrals from existing employees
  • Word-of-mouth from partners
  • A nomination process from important stakeholders
  • Etc.

 

3)      How can you best reach the target audience from which you’d like to create a pool of applicants, where are they likely to be looking?

Be thoughtful about what type of candidates you will be excluding by only using one or two marketing mediums for your job posting

Think about “selection bias,” that is, some marketing mediums such as news papers, LinkedIn or your company website will attract a particular type of candidate.  Be thoughtful about what type of candidates you will be excluding by only using one or two marketing mediums for your job posting.  Similarly, word-of-mouth referrals and nomination processes may exclude candidates who may bring different perspectives and add complementary skillets.  People tend to refer people that are similar to them; this may be beneficial or harmful depending on your situation.

 

4)      What type of an image do you want to send about your organization and the position you’re hiring for? 

The way that your organization is perceived by the talent pool that you’re trying to attract will greatly affect the number of applications you receive.  Brand management is something that is a broader topic than can be covered here, but in your job posting you can be thoughtful about how you can position your organization in a positive light to either amplify existing beliefs about your organization or counter negative ones.

5)      Selling points, non-monetary compensation, flexible hours, location, organizational culture, etc.

highlight intangible things like flexible work hours, a great location of your office, and organizational culture

Along the lines of “selling” the position, it is important to highlight the non-monetary compensation that employees enjoy at your organization.  These can go beyond things like health and wellness benefits, highlight intangible things like flexible work hours, a great location of your office, and organizational culture, proximity to coffee shops and restaurants, positive and supportive colleagues, opportunities for career advancement, etc.

 

6)      Are there “Employment Equity” or “Human Rights” considerations for this position?

In your job posting, it is important to think about whether your organization has an existing employee equity program that you should incorporate into your recruitment strategy.  Similarly, unconscious and non-obvious phrases may actively dissuade applicants from some protected groups under human rights law.  The perception of any type of systematic avoidance of protected groups, even if unintentional, can still be deemed a human rights violation and may be subject to litigation.  Be thoughtful about how different groups may perceive your wording, follow strategies laid out in your employee equity plan if you have one.

7)      Are there internal candidates we should be looking at?

Sometimes it may be beneficial to post job opportunities internally before posting them to candidates outside of the organization.  This offers existing employees the opportunity to progress in their career without having to change companies.  This helps to maintain institutional knowledge within your organization and keeps your employees motivated.

There are many other aspects of a recruitment strategy, but these are some of the broader topics that should be thought of when coming up with a process to recruit top talent.

References:

 http://www.amazon.ca/Recruitment-Selection-Canada-Victor-Catano/dp/0176504370 

Dear Consultant,

 I work in a small engineering firm that designs and manufactures products that are brought to market by our clients.  Even though many of these products sell to customers for a lot of money, we don’t get paid very much for the items that we produce for our clients.  I recommended to my boss that we should start selling them ourselves.  She told to come up with a business strategy to bring to her and the team.  Where do I start?  What parts should I include in a business strategy proposal?

What is business strategy is a broad and debated topic among practitioners and among academics.  In your case though, it would be interesting to hear what your bosses motivations were for asking you for a business strategy rather than a business plan.  Usually a business plan is more operational in nature, detailing the specifics of how you’d bring the products that you design and manufacture to market, specifying just how much money you’d make and itemizing the risks and contingency plans, etc.

By asking specifically for a business strategy I wonder if she is was trying to get you to think about what your company currently does in a way that is competitive in your industry, versus what you’re proposing in your suggestion above.

There are two useful tools that may help you to think about the strategy currently that you’re suggesting versus the strategy that your company is currently pursuing.  This response will be done in two parts, the first will focus on the Strategy Triangle, that may answer your question, “what is a business strategy”.  The second part will show you the Diamond-E tool that will help you to evaluate whether your suggestion is a sound business strategy.

This response is based partially on industry best practices and on a framework provided in Strategic Analysis in Action (Crossan, Fry & Killing, 2002).

Thinking strategically usually refers to planning ahead and thinking about the future implications of today’s actions.  In a business, the ways that we plan ahead is to set goals and make decisions about what products or services that we sell, and where we sell them.  These decisions are based on what things we’re able to do well as a company and based on what the competition is doing.

Crossan, Fry and Killing (2002) suggest that strategy is made up of four parts:

1)      Goals – Goals are milestones that your business should work towards. The best goals are specific, measurable, achievable, relevant to your company and have a time based deadline.

2)      Product/Market Focus – This relates to the identification of two things: first, what products and services that you’ll sell.  Second, who you’ll sell them to; what geographic area will you sell into and what type of customer will you sell to?

3)      Core Activities – This is the identification of what it is that your business does well.  This requires some thought about your operations today, but also about what you could do in the future.

4)      Value Proposition – This is the reason that customers want to purchase your product or service.  This is related to something that differentiates your products or services from the competition.  A portion of the value proposition comes directly out of the above three items, the goals that you choose to pursue, the product/market focus that directs your operations and the core activities that your organization does really well.

Here is a way to visualize the four components of a business strategy:

In your case, you’d want to assess what the goals are for the strategy that you suggested to your boss,  as an example, you could set the goals of selling two new products directly to consumers within the first year and selling 50,000 units.  Your product market focus could specify which products and which cities you’ll sell into.  You’ll need to think carefully about your company’s core activities.  Do you have the distribution network and retail capabilities to sell products directly to consumers?  Could you gain the capability?  If so, how much would that cost?  With respect to your value proposition, why would consumers purchase your products over products sold by competitors?  Is your product/market focus unique?  Do your core activities make you better at it than everyone else?

Dear Consultant, I work in a small engineering firm that designs and manufactures products that are brought to market by our clients.  Even though many of these products sell to customers for a lot of money, we don’t get paid very much for the items that we produce for our clients.  I recommended to my boss that we should start selling them ourselves.  She told to come up with a business strategy to bring to her and the team.  Where do I start?  What parts should I include in a business strategy proposal?

 In this response I will describe a good model that will help you evaluate the fit between a proposed business strategy and your organization.

The content of this response is based partially on industry best-practices and partially on work by Crossan, Fry and Killing (2002).

Diamond E Framework : StudyOnRedditThe Diamond-E framework is named as such because it helps us think about the whether or not a particular strategy fits properly with four other important factors that affect the success of a strategy.

These four factors include: 1) The preferences of current management (executives, board, owner/operator, shareholders, etc.),

2) Organizational capabilities, culture and behaviour of employee and stakeholders,

3) Resources that are available to the organization, including money, equipment, social capital, connections, etc.

4) The environment within-which your organization operates; this includes the competitive landscape, your customers, partners, government, sustainability considerations, technology and the broader economy, etc.

All of these four factors need to “fit” with your strategy, if they don’t then the feasibility of your strategy is in jeopardy.

All of these four factors need to “fit” with your strategy, if they don’t then the feasibility of your strategy is in jeopardy.  What I mean by fit here is that your strategy needs to realistically take into account each of the four above mentioned factors.  Let’s say for example that your suggested strategy goes against the desires of top management, and they are strong-headed enough not to change their minds even in the context of strong evidence supporting your strategy, then there is a gap in the link between your strategy and management preferences.  This is useful because it helps you plan how to close that gap.  The arrows in the above diagram of particular importance; think about how well your strategy fits with each of the four factors.  If the fit is not good, then think about how you can make it fit better.

Now let’s apply your strategy to the Diamond-E model by examining each of the four connections:

1)      Strategy to Management Preferences:  Ask yourself, will your boss and other executives be interested in starting a business that sells directly to customers in some retail capacity, rather than to other businesses?  If not, how would they be convinced?

2)      Strategy to Organization: Does your organization currently have the capabilities to sell directly to non-business customers?  If not, then how would you propose to do this, and how much would it cost in terms of time and money?

3)      Strategy to Resources: Does your company currently have the excess capacity in terms of worker resources to devote to making this initiative happen?  If not, which projects would those employee resources be diverted from?  How much would that diversion cost the company?

4)      Strategy to Environment: Is there a customer market for whatever product/service that you’re proposing to sell?  Are there competitors currently selling those products?  How would your current business customers react to you selling to their customers? Can you do it in a way that is differentiated from competitors in some way?

Evaluating business strategy requires a holistic view of your organization and its environment.  The four above mentioned factors are umbrella concepts that include a number of sub-factors that should be taken into account when evaluating any business strategy.

Dear Consultant,

For the last several years, my wife and I have been helping a youths in our neighbourhood sell their artwork through local business-owner’s stores and through an online portal.  We’re established enough now that we’re looking at creating a formal business out of this.  We see the opportunity to make money for ourselves while at the same time helping the young artists in our city.  What are the advantages of registering as a non-profit versus a for-profit organization?  We’re obviously not in this just for the profit, but we’d like to earn some money to cover our expenses and maybe even pay ourselves a bit too!

Contrary to what many entrepreneurs think, starting a non-profit does not necessarily mean that you’ll forego a salary and do hard work only out of the goodness of your heart.  Non-profits can be operated as a business, earning money to cover their expenses from the sale of their products or services just like a for-profit organization.  That means that you can not only cover your expenses, but you can also pay yourself a salary as you see fit.

Non-profits aren’t charged as much taxes as for-profits, but are expected to provide some type of product or service of a charitable, scientific, religious or public safety nature.

The key difference between a non-profit and a for-profit organization is that non-profits aren’t charged as much taxes as for-profits, but are expected to provide some type of product or service of a charitable, scientific, religious or public safety nature.  Also, non-profits are supposed to stick with activities related to their basic purpose; if they deviate or “pivot” away from their core tasks, they may be required to pay tax on their income after expenses are subtracted, just like a for-profit business.

One common misconception is that as a non-profit organization, you cannot “make a profit.”

One common misconception is that as a non-profit organization, you cannot “make a profit.” That is, you can’t earn too much money above and beyond your expenses.  This isn’t really true, you can make net income, but you can’t simply put that money into your pocket.  That profit needs to be reinvested into the organization.  So the profit can go towards more marketing, or hiring a new employee, etc.

The other thing to think about is whether you’d like to receive donations as well as earning money from your product or service.  If that is the case, you may want to become a Nonprofit Corporation.  In many jurisdictions, Nonprofit Corporations can issue tax receipts to donors allowing them to get tax benefits for the money that they give you.  Incorporating is a different organizational form from simply registering a business as non-profit or as 501(c).  In the USA, these are known as “Nonprofit Corporations” and in Canada these are known as “Registered Charities.” 

… at the end of the day, registering as a non-profit may be a valuable way for you maintain the trust of your stakeholders.

Registering your business as a non-profit often makes people more apt to help you out.  If they believe that you’re in it for the profit, then you may lose some social capital with those who question your motives.  You’ve said that you’re not strictly in it for the profit, and you’re dependant on the trust of local businesses and neighbourhood youths for the products that you sell, so at the end of the day, registering as a non-profit may be a valuable way for you maintain the trust of your stakeholders.

Dear Consultant,

I’m a new manager in a large, well established financial institution.  I’ve worked in this industry for a long time for two of my current company’s competitors, and I have a good sense that we need to change the way we do a number of things internally.  I hit resistance every time I bring this up, both with my colleagues and with my director.  I believe this is an important issue, how can I tactfully yet forcefully advocate for change?

Organizational change is challenging within any institutional setting, especially when others in your organization don’t perceive the need for change.  This is compounded within organizations that have shown a track record of success that they can point to for reasons not to change.  The old adage “if it ain’t broke, don’t fix it” is frequently cited as an excuse to maintain the status quo.  

“If it ain’t broke, don’t fix it” is frequently cited as an excuse to maintain the status quo

Unfortunately, this is not a proactive approach to recognizing changes in consumer desires, competitive landscape or any other part of the complex system that surround organizations.  Change for the sake of change is not typically a good idea, but constant critical-reflection on current business practices based on the ever-changing business landscape can help keep an organization ahead of problems before they become apparent.

 

Having worked for three different companies in your industry, you may have insight into the financial sector that some of your colleagues lack.  If you’re sure about this organizational improvement and are serious about instituting change within your organization then there are three approaches that on their own or combined can help to institute change.

First, have sound technical reasons supporting your change

1)      Expert Advice –  Any change to what your organization is doing needs to be based on sound, technical reasoning.  The technical reasoning that justifies the status quo needs to be squarely questioned based on changes in the business environment.  You’ll need to quantify the need for change through measurable outcomes such as financial and sales projections.  One of the key issues here is that whomever is offering the expert/technical advice needs to be perceived as an expert.  If you’re new, and you’re not known enough in the new organization, then recruit someone else who agrees with your approach and cite them as the technical expert.  Pitt et al. (2002) call these technical experts “upward-facing advocates” when leading organizational change.

Second, connect with people on an emotional level

2)      Emotional Resonance – Remember that you’re dealing with humans, who whether they like to admit it or not, react to emotions.  Positive or negative, strong emotions will elicit a reaction from your target audience.  Stirring up people with an anecdote based on success or fear may contribute to encouraging people into action.  This isn’t always easy to do, and people who can successfully perform this upward-facing emotive championing (Pitt et al., 2002) frequently show true passion for an issue.

Third, network your idea throughout the organization

3)      Network the Idea – Brokering the need for change as well as the solution throughout the organization is also important.  You or someone supportive of your idea needs to be the “symbol” or representative for the change initiative who can act as a hub for advocacy.  Lateral persuasion (other colleagues and teams) is just as important as vertical persuasion (your boss and bosses bosses) to institute change within an organization.  Organizations are not traditionally democratic, but people vote with their actions so having a posse supporting your change initiative will help your cause.  Pitt et al. (2002) call people who engage in activities such as this “democratic brokers.”

Including these three activities into your approach to make changes in your organization may improve your likelihood of success.  The intrapreneurs who advocate for change within an organization are almost always noticed; whether this is a good or a bad thing for you will depend on your organization’s culture, your approach to instituting change and the outcome of your change initiative.

References:

Pitt, M., McAulay, L. & Sims, D. (2002) Promoting strategic change: ‘playmaker’ roles in organizational agenda formulation, Strategic Change, 11: 155-172

Dear Consultant,

I’ve been the general manager of a successful auto-parts supplier for the last twelve years.  I’m known to be a pragmatic boss, but sometimes my management style, or leadership approach or whatever you want to call it, rubs people the wrong way.  I’ve had issues with logistics partners not wanting to work with our team and it has been suggested that we’re not upfront in our negotiations.  Our parent organization has asked me to look into implementing an Authentic Leadership approach when dealing with my team and other stakeholders.  How can I do that?

The issue of perceived honesty and trustworthiness among followers cannot be underestimated when trying to be an effective leader.  When people talk about which characteristics they most value in a leader, honesty and trustworthiness are consistently at the very top, above effectiveness, above competence, above likability, etc. (Kouzes & Posner, 2007).  

Those who are seen as dishonest immediately lose credibility in almost all aspects of their leadership

 Those who are seen as dishonest immediately lose credibility in almost all aspects of their leadership (O’Keefe, 2002).  For there to be enough discussion in your organization about a perception of a lack of trustworthiness in your team, especially as it related to your own leadership then you need to act now to reverse this perception.

 

One leadership approach that is inherently linked to characteristics of honestly and authenticity is the concept of Authentic Leadership, which is an active area of the Leadership literature.  It is also frequently associated with ethical leadership and a way to help leaders develop with a framework to inform their own leadership actions.  In your own situation, you may ask yourself whether or not your leadership actions, as they relate to your team and to your partners, would adhere to the following four aspects of Authentic Leadership as described by Walumbwa et al. (2008).

1)      Self-Awareness –

Do you have significant amount of insight about yourself?  The trouble with this one is that you don’t know, what you don’t know about yourself.  Sometimes we’re aware of our own personal biases, or we’re aware of when we tend to be overly aggressive or overly passive.  When we act irrationally or when we are overly analytic.  These behaviours exist in all of us, but Authentic Leaders are aware of these behaviours and they are aware of when they tend to manifest themselves in our leadership practices.  We cannot effectively interact with others without a strong understanding of ourselves and our own modes of communicating, assumptions about the world, and biases towards relevant topics.  Sometimes this self-awareness is important to provide a rationale for your actions, showing you and others what you stand for.  Sometimes this self-awareness is necessary to temper the aspects of yourself that are not beneficial to the situations that present themselves in a leadership context.  Some questions that you can ask yourself, or have others assess,  to help you understand this factor:

We cannot effectively interact with others without a strong understanding of ourselves

 

  • Do you seek feedback to improve interactions with others?
  • Can you accurately describe how others view your capabilities?

2)      Internalized Moral Perspective –

This is about having your own set of morals and values that guide your behaviour, rather than being strongly influenced by others.  This is not common, most of us cave to pressure from those around us and from society, having your own set of morals and values that guide our actions in the face of pressure from others is an important aspect of Authentic Leadership because it provides a consistent message to followers around a set of values, despite situations that make the moral-route forward, the more difficult route forward.  A key thing about this is that the internalized moral perspective must not only exist within you, but it must also come out in your actions.  You cannot simply think or say these morals and value, you also need to action on these morals and values. Some questions that you can ask yourself, or have others assess,  to help you understand this factor:

Act based on your own beliefs, not based on influence from others

 

  • Do you demonstrate beliefs that are consistent with actions?
  • Do you make decisions that are based on your core beliefs?

3)      Balanced Processing –

Authentic Leaders need to be able to analyze information in a way that is not biased and is as impartial as possible.  Theoretically, someone who had absolutely no stake in the decision regardless of the outcome with no preconceived ideas or biases should have balanced processing when making decisions.  This is difficult to do when you’re known for supporting a particular decision; ideally you’d want to gather the opinions of all stakeholders and impartially weigh the pros and cons of all viewpoints before making a balanced decision based on all the facts at hand.  You may not agree with all of the stakeholders, and your decision may not be supported by everyone, but you’re perceived to be authentic because you’ve genuinely balanced their opinion against that of others. Some questions that you can ask yourself, or have others assess,  to help you understand this factor:

Make decisions in a way that is unbiased and takes into account the opinions of others

  • Do you solicit views that challenge your deeply held positions?
  • Do you listen carefully to different points of view before coming to conclusions?

4)      Relational Transparency –

This aspect of Authentic Leadership relates to your ability consistently communicate your motives and inclinations as well as your emotions.  Hiding your emotions or your underlying motives in a relational situation can hurt your credibility when it is determined that you haven’t been forthright.  Discussing emotions can be difficult and even inappropriate in some industries, but situational awareness of what is appropriate and what isn’t appropriate is needed to understand how far to go.  Being clear about your motives and inclinations is almost always a good idea if you intend on being perceived as an Authentic Leader.  Setting the tone of a social interaction by being transparent right from the beginning frequently creates a more consequence-free environment to encourage others to act in a similar fashion.  Some questions that you can ask yourself, or have others assess,  to help you understand this factor:

Consistently show your motives, inclinations and emotional state with others

 

  • Do you say exactly what you mean?
  • Are you willing to admit mistakes when they are made?

These four factors comprise the current thinking on Authentic Leadership.  Authentic Leadership isn’t associated with a set of quick and easy steps to follow to become a good leader; it is more about deep introspection and personal development.  Authentic Leaders are not simply born with innate characteristics, but they are purposefully developed through acting with intent in all of our behaviours.  Start by relating each of the above four factors to your own behaviours; your own understanding of your ability to act with self-awareness, an internalized moral perspective, balanced processing and relational transparency may or may not be clear to you, but the act of putting thought into each of these is a positive start.  The next step is to ask others to honestly assess these four factors and how they relate to you and your leadership.  Depending on how far you’d like to take this, there is a scale that you can use to measure your current ability to be an Authentic Leader called the ALQ that can be used to show progress as you develop as a leader.

References:

Kouzes, J. M. & Posner, B. Z., (2002) The Leadership Challenge, San Francisco, CA: Jossey-Bass

O’Keefe, D. J., (2002) Persuasion: Theory and Research, Thousand Oaks, CA: Sage

Walumbwa, F., Avolio, B., Gardner, W., Wernsing, T., & Peterson, S. (2008). Authentic leadership: Development and validation of a theory-based measure. Journal of Management, 34(1), 89-126.