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Making 1 + 1 = 3 in the ‘Space Between’ Sectors

At each extreme of a pendulum’s swing, there’s a moment of pause. It’s the briefest possible moment of stasis, when movement halts, and all that’s left is potential.

It’s mesmerizing to watch, trying to catch that moment before the pendulum falls again, and swings to its opposite extreme. It’s an apt metaphor for responsible business: If the business sector is set at one extreme and the social sector at the other, all the action happens in the space between.

At Junxion, over the past 10 years, we’ve grown increasingly fascinated with what we’ve come to call ‘the space between.’ It’s framed at one extreme by traditional business—extractive, potentially exploitative, and profit-driven; obsessed with shareholder value and a narrow view of economic gain—and at the other extreme by the social sector—supportive, potentially apologist, issue-driven, and trapped in a ‘scarcity mindset.’ One is ‘winner takes all.’ The other is ‘victim needs more.’ Both are zero sum.

In the ‘space between,’ we’re seeing answers emerge to some of the most pressing issues of our time.

In the space between, though, there are new approaches and solutions that aren’t zero-sum. They’re additive, generative. They make one plus one equal three. And some of the most impressive, innovative and progressive solutions of the past generation are delivering profits while simultaneously driving social impact and environmental sustainability. In the space between, we’re seeing answers emerge to some of the most pressing questions of our time: poverty, climate change, accessibility of health care, education, and so many more.

So what’s driving companies and non-profits into this additive ‘space between?’

For businesses, it’s a complicated confluence of factors. First, the astonishing changes driven by social media’s capacity for extremely rapid dissemination of news (or misinformation), means there’s no time or opportunity to ‘spin’ bad news any more. So companies are feeling the heat of the spotlight as soon as anything goes awry. This is forcing them to think more broadly about responsible behaviour across the enterprise.

Second, as they move into and up the workforce, taking on more senior management roles along the way, the millennial generation’s distinctive worldview is changing how businesses think about community and environment. As a generation, millennials bristle at the notion of separating their work from their sense of purpose in life. They won’t work nine to five and then ‘give back,’ as baby boomers have done; no, their aspiration is to integrate work and purpose. And companies that want to recruit, engage and retain millennials are responding to this pressure by thinking more broadly about the strategic purpose of business.

And third, as corollary to these first two reasons, the interconnected transparency within organizations and across organizational boundaries is making for free information flows. Insights that used to be held in private databases seem now to have their own mobility. Secrets are harder to keep as consumer groups, social movements, activist shareholders and other stakeholders push companies to disclose more and more about their work. Corporate reputations matter.

Insights and information now have their own mobility. Secrets are harder to keep.

All these pressures and others are driving companies to think more deeply about their impact on local communities and society more broadly, and about their environmental footprints. They’re being forced to think about issues that used to be the domain of the social sector, including labour movements and unions.

For non-profits, the influences are similarly systemic and strong. First, as austerity policies and neo-liberal economics have permeated Europe and North America, non-profits and individuals are being asked—no, told—to shoulder more of the financial burden for social services. Under the guise of privatization and faith-in-the-market, governments have delegated or downloaded responsibility for social issues to non-profits and NGOs—without simultaneously equipping them with the resources to manage the increased workload.

Second, during this period of historic low interest rates, non-profits’ and philanthropies’ endowments are simply not earning the returns they once did, so charities and non-profits that rely on those funds for their operating budgets are looking at empty coffers, and struggling to make ends meet. The same low interest rates are drawing down corporate and big grant-makers’ ability to give to the social sector as well.

And third, unrealistic expectations of non-profits’ administrative and overhead requirements are simply unfair. It’s been dubbed ‘The Nonprofit Starvation Cycle.’ Somehow, 10% of revenues became the ‘gold standard’ for administration budgets. It’s an absurd figure: We would never expect a company to hold to such an austere administration budget. It’s untenable, and word seems finally to be getting out to donors and other funders that it’s counter-productive. Like businesses, non-profits need to be able to invest in R&D, personnel development, and management of diverse and complex programs.

Like businesses, non-profits need to be able to invest in R&D, personnel and management of diverse and complex programs.

All these pressures are driving non-profits to find novel alternatives to revenue from grants and investments. Many are borrowing lessons from the business world to do so: Social enterprises, defined as companies owned and operated for the benefit of non-profits or their constituents, are on the rapid rise. (In western Canada, the annual growth rate in the number of social enterprises has been greater than 100% for five straight years.) And management approaches such as branding, scenario planning and others are showing up more often in non-profit conferences and practices.

How can you take advantage of the ‘space between?’

If companies are thinking about their ‘purpose beyond profit,’ and non-profits are thinking about using business principles to support their missions, then the space between is a blend between the efficiency and innovation of for-profits and the community contributions and empathy of non-profits.

Social enterprise itself is not new. Museums have always had bookstores; hospitals have always had gift shops. But what is new is the plethora of executive education and capacity-building programs for non-profit leaders who are thinking about using social entrepreneurship to support their organizations and missions. Even universities are adding to the programming mix, with undergrad and graduate level studies in social enterprise, and dedicated centres in major, global institutions like Oxford. Get to know the quickly growing literature on social entrepreneurship. Meet with its teachers and students. Step into conferences that occupy ‘the space between,’ and expose yourself to new ideas, practices and standards.

Pressure on companies to behave responsibly is also not new. It has taken significant and sustained pressure over decades from trade unions and policy advocates to establish fair wages, safe working conditions, and environmental regulations that we now see as normal, or a minimum standard. What is new is the accelerating movement toward open, transparent corporate social responsibility—and the acceptance by business executives that companies are responsible for more than just shareholders’ profits. Social impact and environmental sustainability are moving to the centre of business strategy. Include expert, experienced voices that understand community and sustainability in your planning conversations, and on your management teams. At heart, their perspectives can be complementary to your business goals.

Companies may be new to thinking about a ‘purpose beyond profit.’ Non-profits have done that for years. And businesses can learn a lot from the social sector’s comfort in nuance, ambiguity, and immeasurability.

One of the things that intrigues us most about ‘the space between’ is the opportunity for inter-organizational collaboration. If companies are choosing to pursue a ‘purpose beyond profit,’ and non-profits have been thinking for years, decades or more about broader social purpose and impact, then through cross-sectoral collaborations, each can do more, better, faster. If non-profits are thinking about using marketplaces to achieve their missions, then they can learn from the business world about innovation, efficiency, market outreach and engagement, and more. If businesses are committed to putting metrics and measurement to their social and environmental efforts, they can learn from the social sector’s comfort at navigating nuance, ambiguity and complexity, and their capacity to accept that a ‘Theory of Change’ is sometimes as close as we can get to proof of progress.

Massive challenges like climate change and global poverty are finally getting the response they need. It will take all of us working systematically across sectoral, organizational, generational, national and even personal boundaries to find and foster enduring solutions. In the ‘space between,’ we’re finding bold new ways to work together. Maybe it all starts with a simple invitation: Rather than seeing for-profit and non-profit sectors as oppositional or disparate, ‘Shift Your Thinking’ and look instead to the generative ‘space between.’

Mike Rowlands is President & CEO at Junxion, and works in both the business and non-profit sectors, helping boards, executives and management teams find advantage and influence in ‘the space between.’

 

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