Business plays a significant role in driving societal evolution. It provides livelihood support for billions, fuels progress, and offers a way to freedom and independence. Social enterprises attempt to put purpose at the core of business endeavors for a better result on people, planet, and profit. However, no business is safe from risk. Today, many businesses are bumping up against hardship as they continue to be informed by outdated economic paradigms and run with strained management practices even as they face increased competition. When the inevitable challenges surface for social enterprises, do they honor their purpose or default to economic imperatives?
A knee-jerk response would be to default to economic imperatives—put the social purpose on the back burner, shore up the business, and then try to re-integrate the purpose when things are stable once more.
But in growing the Impact Hub, a global network that enables purpose-driven entrepreneurs to connect with and help one another, we have found that the answer can be “both.” We have learned through our own experience how collective leadership—leadership that stems from collaboration—ensures that purpose continues to remain the core strategic driver even when economics are top of mind.
Purpose in Practice
Collective leadership, as we define it, starts with articulating the organization’s purpose and identifying the relevant “collective” or stakeholder group. A validated theory of change should make that visible. The next step is to empower stakeholders with authority and responsibility within peer-to-peer structures. And finally, collective leadership thrives when supported by a culture of collaboration and on-going learning. -We achieve this through three actions:
1. Democratizing decision-making. This is about giving stakeholders a voice in the purpose definition, actualization, and governance processes.
Made up of individual city-based Impact Hubs, the Impact Hub network transitioned from a franchise-based model to a distributed network model in 2011. With this transition, it decided to give each local Impact Hub an equal voice in the global association. Today, a local Impact Hub engages in quarterly virtual decision-making forums, accesses transparent network data, and attends gatherings to shape the global agenda. At any point, a local Impact Hub can propose global initiatives, challenge existing ones, and engage transparently in network governance. The core global team remains lean, but in a regular year there are up to 200 local leaders who propose, vote, and implement global decisions.
Local Impact Hubs also enable their own “customers”—the organizations in each entrepreneurial community—to understand, debate, and participate in the way that Impact Hub evolves. Their input, as users, has led regularly to new initiatives and processes such as distributed financing mechanisms or shared business opportunities.
Whilst this openness may feel dangerous at times, competence in driving multi-stakeholder processes and the employment of new decision-making approaches, such as Dynamic Alignment and Sociocracy (where participants focus on “workable” versus “ideal” solutions—those that everyone can subscribe to without needing consensus or just following the majority voice), can mitigate the risks. As Danny Gal, co-founder of Impact Hub Tel Aviv, put it: “It takes a lot of self-discipline to be OK with the fact that we can come from many directions, but when we do that together, it is going to be more sustainable, relevant, and grounded.“
2. Enabling peer-to-peer structures. This step is about making sure that stakeholders’ voices matter—ensuring that there is both authority and responsibility in their relationship to purpose. According to Pablo Handl, co-founder of Impact Hub Sao Paulo: “Once you give autonomy and freedom to people, you must feed it back to the core and the collective. You need to see more together, including at the edges, so as to make conscious choices around the way to move forward with the business.”
In that spirit, at Impact Hub Tokyo, employees review each other’s deliverables, pitch new business ideas to one another, and take formal time to reflect on the business individually and as a group. Shingo Poitier de la Moradière, a co-founder, says that this process “tested our trust, discussion skills, leadership, and accountability. We are now holding each other to account in a very open, trust-based way, and identifying how initiatives bring value to our purpose, and not just our business, is central to our decisions.”
3. Nurturing a collaborative culture. Finally, collective leadership is about engaging in ongoing learning processes that support a culture of collaboration, using a variety of different tools to that end. For example, Impact Hub Amsterdam designs and energizes organizational roles in service of purpose using Holacracy—an organizational model that gives greater autonomy to individuals within their roles and focuses on roles cohesion. It also engages people to take responsibility for sharing their experiences with others, even in conflict, through techniques such as Inscaping—a practice that helps individuals realize whether they experience purpose in everyday work and express any conflicts they identify.
Tensions and dissonance are aplenty in a collective leadership organization. However, with the appropriate culture in place, tension can become the fuel for growth and innovation. As Phil Gaskin, director of Impact Hub East Coast US said, “A healthy mix of backgrounds, personalities, cultures, and profiles is needed to ensure that the purpose remains actualized. This is why a culture that builds common ground for healthy debate, rooted in strongly collaborative practices, respect, and inclusion is essential.”
Emphasizing the why
Collectively led social enterprises instill a shared sense of why they exist throughout the organization. They encourage people to deepen purpose through practice, whilst holding each other accountable. And they bring to life the type of business that takes a holistic approach to sustainable profits, people, and planet. This way, when challenges appear, the purpose lives in the minds, hands, and hearts of all stakeholders, and is less likely to be compromised by economic constraints.