Boston Business Journal November 13, 2009
by Leonard A. Schlesinger and Alan Lewis
Now, more than ever, our communities depend on social enterprises to provide services for those in need and to tackle a host of difficult issues. These nonprofit groups often depend on volunteer board members who are not always sure of how they are adding value.
Business leaders who serve on boards often ask themselves how they — and the organizations they support with their time, treasure and talent — can do more. This problem was recently debated at a meeting of local CEOs convened by the Boston Business Journal. Some of the conclusions are easy to act on, some much more complicated:
- Prospective board members should ask, "What do I know that I can bring to this board that this enterprise needs?" It may seem obvious, but business leaders can make a difference and, at the same time, have a satisfying experience by bringing a very specific functional expertise, for example, in finance or facilities.
- Board members should help the social enterprises develop and adopt better measures of effectiveness. For-profit firms work within a system that enables, even insists on, the clear identification of measures, starting with profit, of course. Further, measurement drives boards of for-profit firms to evaluate leadership against a set of strategic and financial goals. What can the nonprofit world learn from these systems and methods that would help improve performance — in the interest of increasing their intended impact on the communities they serve?
- Help nonprofit organizations achieve scale. It remains difficult for social enterprises to move beyond the local level to achieve regional, national, or global success. Imagine if one of the social enterprises providing safe clean drinking water or cleanly generated electric power to a village in Africa were able to scale and have the relative impact of an eBay or Apple. None have. In the for-profit world, the business system enables growth through loans and investment, mergers and acquisitions.
There is no parallel system for nonprofits, with the valuation of the respective firms and, let's face it, the payoff, to the leadership team that does not survive the merger. Instead, there is nonprofit proliferation. Margaret McKenna, the CEO of the Wal-Mart Foundation, said to a group of enormously passionate and enthusiastic young social entrepreneurs at the Clinton Global Initiative University forum, "There are already too many nonprofits. It would be great if you learned from them before you started another one."
At our meeting, we arrived at another important goal: Bring CEOs and board chairs of our community enterprises together to learn from one another, drive the effectiveness of these boards, and ramp up the impact of these vital enterprises.
We have the opportunity to call a gathering of the CEOs to enable them to improve the governance of their enterprises. Such a conversation would help to focus board members and could yield great benefits to the region.
Leonard A. Schlesinger is the president of Babson College. Alan Lewis is the chairman and CEO of Grand Circle Corp.