Success Precedes Scale – Tess Reynolds, CEO New Door Ventures

Much has been discussed about bringing social enterprise to scale.  I want to build on a recent post by David Howard who affirmed our need for a shared identity.  Howard wrote, “I posit that the field needs a more widely accepted and understood definition – one that promotes both a strong shared identity and a clearer resonance among stakeholders—in order to better galvanize efforts to scale.”

I posit further that a shared identity must be based on a shared definition of success.  Only when we collectively demonstrate success according to that shared definition can we achieve the kind of scale and collective social impact we aspire to.  Said another way, success precedes scale.

What defines our shared identity?  What emerged from REDF’s recent convening is that we are social enterprises doing workforce development.  To further clarify this shared identity, I propose these common factors:

1.   We are nonprofit 501 c(3) organizations operating social enterprises – businesses measured on both a financial and social bottom line.

2.  We share a common social mission of workforce development, which I would define as providing jobs and some type of programmatic intervention to workers with barriers to employment.

3.  We share at least one common measure of impact: sustained employment following a period of programmatic intervention.  Exceptions might be made for clients with disabilities where the measure might simply be sustained employment, period.

It is tempting to include all other forms of social enterprise, such as for-profit companies that deliver a social benefit, or those that create jobs but do not provide supportive services or any programmatic intervention.  Much as I value these contributions to society, including them in the circle makes the common success definition fuzzier.  We practitioners of social enterprise have allowed our diversity to permit diverse definitions of success, and in doing so, we’ve watered down our value proposition to funders and donors, partners, and above all, the customers and clients we serve.

What defines success based on our shared identity?

1.  Our financial and social bottom lines must add up to a compelling value proposition.   

I contend that a social enterprise could be considered successful, even if its business does not generate profit — if it sustains and grows fundraising revenues to cover social mission costs.  Among social enterprises in workforce development, it is rare to find those who generate positive net income from business customers alone.  Most need to fundraise from government, foundations and/or individuals.  The double bottom line model can actually help, not hurt, in creating a compelling value proposition for donors who like the integration of business disciplines with a social purpose.

It’s not easy to hold the polarity of the social enterprise’s dual bottom line.  At some point, either the business or the program grows ahead of the other.  Polarities, by definition, are healthy tensions between two good ends of the spectrum.  It’s not an either-or proposition of either financial health or social impact. The power of our value proposition lies in our holding the two together, and constantly declaring why it matters.

2.    Our success is ultimately defined as social change.

It’s less about size and more about significance.  Frankly, we should not call ourselves social enterprises if we aren’t ultimately about achieving significant social change.

Being in workforce development, we serve people who are at the bottom of the hiring pool – perhaps through histories of incarceration, homelessness, under-education, diagnosed disabilities and more.  By the very nature of whom we serve, some type of programmatic intervention is needed to help clients achieve sustainable employment.  We provide job training, life skills development, case management and many other supportive services to allow workers to build the skills, experience, and confidence that they need to be able to succeed in the workplace on their own.

Our value proposition, then, must be built on a solid theory of change – an evidence-based model that demonstrates credibly that our social intervention delivers social outcomes that would otherwise not be achieved, or achieved as effectively, without our programmatic intervention.

Success endures and grows. 

We all know healthy organisms grow and bear fruit.  There are small healthy trees and big healthy trees, and then there are just trees struggling to survive.  It doesn’t take much to recognize them.

Good leadership is at the heart of a fruitful organization.  I don’t just mean leaders at the top, but leaders throughout the organization –including front-line staff who serve clients well, and boards that support as well as govern.  Good leaders navigate through downturns and seasons of rapid change.  They keep the organization tuned to both its business customers and social mission clients, and build great partnerships and alliances that fuel the organization.  Good leaders are effective ambassadors for policy change, for donor engagement and for community volunteerism.  Good leaders move people and resources and create mission flow.

Does scale matter at all?

Yes, it does.  By saying that scale matters, I don’t mean that bigger is better, nor that the biggest is the best.  Scale can be relative to the organization’s potential and priorities.

Achieving scale feels good. For New Door Ventures, it feels good to be able to afford the kind of systems that make our people better at their work.  It feels good to see leverage – to see increasing returns for every dollar spent.  Ultimately, scale matters because clients are better served.  Our clients deserve to be served with excellence, with consistency and reliability, and by a team that models thriving rather than barely surviving.

When we collectively, as social enterprises in workforce development, demonstrate and communicate collective success, scale just happens.  Scale happens because our shared mission compels us to do better and do more.  We are a band of crusaders who have chosen to leverage businesses to solve a huge social need around us. Our sector will ultimately scale because of our ability to win hearts while delivering outstanding products and services.  Most people want to be part of something bigger and more meaningful than everyday transactions.  When we invite them to join our shared identity and shared success, we create a movement that changes society.

Tess Reynolds is CEO of New Door Ventures, a San Francisco-based nonprofit that helps disconnected youth (age 17-24) get ready for work and life.  This year, New Door expects to serve over 250 youth, with 180 in paid jobs at its own social enterprises and about 60 partnering jobsites.  Youth also participate in skill-building workshops, tutoring, and case management.  Tess spent over 20 years in high-tech where she worked in senior marketing and executive roles. She has a B.A. from Ateneo de Manila University and an M.B.A. from Santa Clara University, and has served on several nonprofit boards.

–This is part of REDF’s Accelerating Social Enterprise Growth blog series