Six Mindsets For Building Social Businesses
Building a strong social business is difficult, but definitely do-able.
As Marc Andreesen rightly pointed out, running a regular business is hard enough, and we’re then adding in the complexity of sustainable impact.
Having been part of the team that builds these businesses, I’ve seen a few common traits amongst the success stories – as well as traits missing from the many, many failures.
Part of the challenge is that in order to run one of these enterprises, you need to switch between six different mindsets – ways of seeing the world - in order to avoid disaster.
Some feel like they’re natural opposites of each other.
It’s a bit like training our muscles – biceps and triceps do opposing jobs, as do quads and hamstrings.
If we prioritise the overdevelopment of one muscle, it actually does us harm in the long term, leading to injury and chronic pain.
That’s why we need to focus on all six, not just our favourites.
This is the ability to take blank space or an existing opportunity, then cast a vision of what it could be in the future. More practically, it’s the ability to hold a few different ideas simultaneously, without picking a favourite or binning those that sound too hard.
To do this, a designer needs a deep understanding of who they’re designing for, what is the purpose of their work, and to accurately assess the constraints (or lack of constraints) that shape their work.
Sometimes a client might tell you they want to build a bridge, when what they really needed was a ferry.
You’ll need a blend of optimism, imagination, naivety and patience.
This gives you the ability to see opportunities where others have failed, patience to explain your ideas to the skeptics, and the creativity to think laterally about the task at hand.
Compassion and Realism; two competing forces combine in a single role, that can often burn people out. Compassion is the fuel that drives the humanitarian, who wants to help people avoid catastrophe and to live better lives. This is then shaped by the on-the-ground realities of how aid works, which is often less glamorous and more complex than you’d think.
This is dangerous because it’s so easy to become cynical and jaded – which is not a badge of honour.
The humanitarian mindset gives you the energy to make positive change, but is tempered by learning from the mistakes and limitations identified by those that have come before you.
Factories are fascinating and intimidating; they have the capacity to make a lot of product in a short space of time, but also have the ability to lose you money and ruin a lot of stock.
The mindset of a factory manager is analytical; both the big-picture and micro level detail.
The big picture side understands how raw ingredients are sourced, shipped, transformed, stored and sold.
The micro detail side spots problems before they arise, and to understand your product in depth so that you can ensure that it’s of the best quality.
There’s just too much competition in the market to be complacent in how your product is made. Factory managers get a ground-level insight as to where the business has risks, as well as where there is opportunity. It also ensures that you’re running efficiently, and that what you sell has been well made.
In a time where negative reviews are very public, it’s vital that you’re confident in what you make.
Chief Financial Officer (CFO)
The CFO mindset is one that can see dollars moving through the business like X-Ray vision.
This is the ability to sense how your money flows into the company, how it moves through each department, and where/when it gets spent.
The CFO is not a penny-pincher, but rather someone who prioritises putting money into things that matter, and diverting it away from the things that don’t.
This is well paired with the designer/inventor mindset, allowing you to spot opportunities for higher incomes/prices, as well as eliminating ideas that are guaranteed to lose money.
An anthropologist is someone who studies how people behave. Social entrepreneurs need to understand what motivates a particular group of people; which behaviours are set in stone and which can be subtly influenced.
This applies to your customers, beneficiaries, end users, team members, influencers, investors and suppliers.
You’re asking customers to change their spending habits, suppliers to sell something slightly different, and investors to take a risk on something new.
You’re also changing the lifestyles of your beneficiaries, by giving them jobs, higher incomes or helping them eradicate the social problems that affect their lives.
This is the skill of asking questions like:
“How will people behave if we can double their wages?”
“How can we persuade 600 farmers to switch to a more valuable crop?” or
“What motivates our customers’ decision making when it comes to making a purchase?”
Social businesses don’t tend to exist in nature, they need to be created.
Creation means change, and change is often resisted by all parties.
That means, you’re going to have to delicately change people’s minds.
The anthropologist mindset can spot roadblocks, but it then takes a negotiator to persuade people to do something different.
Negotiators know which things can be traded-off, and which are dealbreakers.
Salespeople know how to push someone’s buttons; to motivate them with the right blend of carrots and sticks so that they see the benefits of the social business.
What I find really tough about these mindsets is the seeming contradictions.
- Being optimistic and realistic.
- Knowing when to push for the sale, and when to leave people be.
- Creating impact while remaining financially viable
- Trying new things whilst remembering lessons from the past.
All of them are possible, yet they feel uncomfortable and murky in the moment.
If you want to build something remarkable, then you’ll need to be able to (temporarily) embrace each mindset. Not all of them need to be your favourite, but you need to know the basics.
Which of these are your natural favourites?
Which of them need some deliberate attention?