Social Enterprise

As CEO of Goodwill in central Indiana, I frequently described our overall objective in general terms as “maximizing mission-related impact while maintaining a financial position that’s good for the organization’s long term viability.”

Taking this approach has required us to define “impact” as well as possible. This has always been a work-in-progress, with improvements in definition and performance over time. Placing substantial importance on mission-related as well as financial metrics is a key feature of a social enterprise. And while “social enterprise” is a relatively recent term, Goodwill has always been one.

From its inception, Goodwill has used a commercial means (selling used goods in a competitive marketplace) to accomplish a social mission. The scope of that mission, originally to provide work for people with limited options, has broadened and now often encompasses other ways of enabling individuals and families to increase their economic self-sufficiency. Still, since its founding, Goodwill has earned and continues to earn the vast majority of its revenue from the sale of products and services. This is unusual for a community-based not-for-profit, and I have always viewed the way and the extent to which the organization blends business and mission as one of Goodwill’s most unique characteristics.

Until recently, it was often difficult for for-profit corporations to include social goals as primary objectives – especially if there was a desire to emphasize the social goals much as the financial goals. Now, however, new corporate options such as the benefit corporation make it possible to do so. Benefit corporations must balance financial and non-financial objectives when making decisions – much as Goodwill always has. Companies that want to go a step further can apply to become Certified B Corps, thus adding more rigor to measuring their social and environmental performance, as well as to monitoring their adherence to high standards in several other areas as well.

Along with the rise in benefit corporations is the notion of “impact investing.” Impact investors make investments in companies that are designed not only to make a profit, but also to achieve a well-defined, measurable social good. Some, though not all, impact investors are willing to take less than a market rate of return in order to help accomplish what they view as important social goals.

These and other innovations are attractive to a lot of millennials who, while interested in having successful careers, are also interested in helping make the world a better place. I’ve met quite a number of them on college campuses where, increasingly, students can take courses – often taught in business schools – on social entrepreneurship. I’ve also served as a judge in a major social venture competition and seen some of the ideas of some very bright young social entrepreneurs. They give me hope!

Benefit corporations, Certified B Corps, impact investing – all of these are new tools for addressing social problems. None represents the solution anymore than does the not-for-profit sector as presently constituted. But in the U.S., the inability of the not-for-profit and public sectors to substantially reduce a lot of major social problems in recent decades makes the addition of some new tools particularly welcome. Perhaps we can all learn from each other and, who knows, even leverage our respective assets and capabilities and come up with some new approaches that will be more effective in improving lives and strengthening communities.

The Magnificence of the Ordinary

(Note: This piece was first posted in December 2013).

While solutions to major social problems must be macro in scale, in the final analysis we must see results in the lives of individual people. As Peter Drucker reminded us, the purpose of any not-for-profit organization is to change lives.

As we offer opportunities to help others improve their lives, the changes can often be in ways that on the surface might seem unremarkable.  As we look deeper, though, we discover that often they are really much more.  Here are some brief sketches of a few people I’ve been fortunate to know during my career.

Cheryl dropped out of high school. She came to Goodwill, learned keyboard skills, got a GED, got a driver’s license, and got a job. A few years later she got married, then had a son.  She’s now been married for over 30 years, and their son has graduated from college.  Cheryl has worked nearly all her adult life.

Sounds pretty ordinary until you learn that Cheryl was born with no arms.  When you know this, you begin to realize that there is nothing ordinary about Cheryl’s life and that, in fact, what she has done with her life is truly magnificent.

Bobby worked at Goodwill. When he was 36 years old one of our staff helped him learn how to write his name and tell time.  For weeks, every time he would see me he would ask me if I knew what time it was. Then he would tell me. For most people, learning how to write your name and tell time are pretty ordinary accomplishments. For Bobby, though, they were magnificent achievements.

Steve was severely limited by cerebral palsy. He used a motorized wheelchair and communicated by using a keyboard with a voice synthesizer. He worked for several years on a contract Goodwill has to do janitorial work in a large federal building in Indianapolis. With a broom attached to his wheelchair, Steve swept 1-1/2 miles of corridors every day. He absolutely loved his job and his co-workers.

One day, Steve was in his motorized wheelchair crossing a street. While he was in a marked crosswalk, a car hit him, killing him instantly.

Many people would not have considered a person doing such an ordinary – and to some, a menial – task to be a success. But Steve exceeded everyone’s expectations – except possibly his own – and worked at a level many would never have thought possible. And he was happy doing it. For Steve, what to most people might have seemed so ordinary was truly magnificent.

When I started working for Goodwill, a member of our board of directors told me he thought Goodwill was amazing. The way he saw it, we took goods people no longer wanted and people no one else wanted to hire and combined them to create self-sustaining employment for a lot of people who otherwise would have been sitting at home surviving on public assistance. To him, ordinary household goods and ordinary people combined to produce something extraordinary and magnificent.

As we get caught up in the busyness of day-to-day work and life, it can be easy to take for granted a lot of what we as an organization and many of our people do so well day in and day out. Fortunately, though, when I see examples such as those I’ve mentioned and many others, I am reminded that much of what we tend to think of as pretty ordinary is much more than that. In fact, much of it is truly magnificent.

Goodwill’s evolution – an organic process

For years, I’ve considered the most unique aspect of Goodwill to be the way and the extent to which we blend business and a social mission. More recently, though, perhaps equally unique is the extent to which we are leveraging our resources and capabilities with those of others to create new opportunities that benefit people and communities. I’ll explain.

A lot of social problems have become worse over the last forty years despite massive increases in public spending and a huge proliferation of not-for-profit organizations. Part of the problem lies in the “silo” structure of the public sector and the fragmented nature of the not-for-profit sector. In many cases, organizations are doing very good work addressing pieces of a larger problem, but seldom have we been connecting the pieces well. As a result, we have not been solving the big problems.

A lot of our work at Goodwill is now focused on connecting pieces. Some of those exist within our own organization and some involve other organizations that have complementary capabilities. We see numerous examples of this, as Goodwill retail employees and Nurse-Family Partnership (NFP) moms enroll in an Excel Center or begin working toward a certification through a class taught by Ivy Tech or Vincennes University.

More examples: We have Eskenazi Health referring expectant mothers to NFP and also hiring graduates of The Excel Centers. We see Indianapolis Day Nursery Association offering employment to NFP moms, helping them work toward certifications, and providing high quality care for their children. And we see graduates of Goodwill-operated schools becoming employed with help from TalentSource, Goodwill’s job preparation and placement service.

The extent to which Goodwill is evolving into an array of networks that link services across organizational boundaries in a holistic, often whole family manner is unique. This approach brings high quality services together to make more effective use of existing community resources and result in greater lasting impact. With sufficient scale, this approach can play a role in reducing generational poverty.

The way we are evolving into this array of networks is not the result of a brilliant grand plan. Rather, it’s an organic process that is ongoing, and it’s largely a product of three primary factors:

  • A lot of smart, talented people who bring to their work not just their knowledge and skills, but also a strong commitment to what we are about – in other words, they bring their heads and their hearts.
  • A culture characterized, in part, by a constant desire to find ways to improve and further increase our long term impact in the lives of people and the communities where we operate. It’s also a culture in which people generally work well with each other.
  • Strong relationships with a lot of people in a lot of other fine organizations across all the sectors.

It’s also important to note that everything we do is built on a solid financial foundation that depends largely on the oldest part of Goodwill – our retail system, which provides jobs for 1300 people whose options are limited by disability or other significant barrier and that is, in turn, dependent on donations of used goods from and purchases by hundreds of thousands of central Indiana residents.

This organic evolutionary process results in a Goodwill that is constantly changing. We try things, we learn, we adapt as the world around us changes, and we evolve as an organization. It’s the approach we take to continue increasing long term impact and help reverse some of the negative trends we’ve seen in our society over the last forty years.

The Seasons

A snowy winter

As I am writing this, it’s snowing – again. But it’s March – finally. And if it’s March, surely spring can’t be far off – can it?

As we approach (I think) the end of the most relentless winter – not to mention one of the snowiest and coldest – I’ve ever experienced, we’ve been reminded – with frustrating frequency – of how badly elements over which we have absolutely no control can affect our organization. Harsh winter weather adversely affects the volume of donated goods we receive and has a negative, sometimes devastating effect on our retail sales. Yet, while revenues drop, expenses rise – for snow removal, salt, higher heating bills, and the costs of higher absenteeism.

While we have no control over the weather, we do have to respond to it. We have to adapt. This year we have had to postpone or eliminate some of what we had planned to do in 2014. Some vacant positions will go unfilled, some capital expenditures will be deferred, and cost controls we’ve imposed will probably remain in place for the rest of the year. But that’s not necessarily bad. It’s a good time to do examine a lot of what we do, do some selective pruning, and become even better stewards of our resources.

It’s also worth noting that weather effects are short term, and despite the early year financial challenges, our mission is not threatened and we will continue to be a strong organization. If nothing else, this winter has reminded us that one of the reasons it’s important to have a strong balance sheet is so we can weather (pun intended) the periodic downturns and occasional external shocks that all organizations invariably experience from time to time.

Even with the constraints we’ve had to impose, we will still accomplish a lot this year. We have nine retail store projects we expect to complete in 2014 and a tenth that will be underway by the end of the year. This will mean more jobs – especially for people whose options are limited by disability or other barrier. More stores also mean more convenient places for donors to drop off goods and for bargain hunters who love to shop at Goodwill.

Our nine Excel Centers remain at capacity, and we will graduate nearly 500 students this year. Most will also earn a post-secondary credential that increases their employability.

Nurse-Family Partnership will continue to grow, as will the extent to which we are able to realize synergies across our various operations and services. For example, more of our NFP moms and Goodwill employees are enrolled in Excel Centers or are receiving job preparation and placement services from TalentSource.

There’s always been a seasonal pattern to Goodwill’s donated goods/retail operations. In the Midwest, donations of goods tend to be highest from spring through early fall, with a spike the last week of the year. Retail sales tend to be strongest when winter turns to spring and when fall weather arrives, with a spike just before Halloween (a relatively recent phenomenon).

But there is no season to the work we do to increase positive impact in the lives of people and the communities in which we operate. Employment of people with limited options is year-round, as are the Excel Centers, Nurse-Family Partnership, and other services Goodwill offers. And our emphasis on continuous improvement means exactly that – continuous.

So – despite the challenges of a winter we’ll never forget, there’s plenty of reason to be optimistic and glad to be part of the work Goodwill does. And if we get a bit crazy when spring weather finally does arrive, at least we know everyone in this part of the country will understand – and probably join in.

On Talent and Culture

I frequently talk about the tremendous array of dedicated, talented people who are part of Goodwill’s team. They can be found at multiple levels in all parts of our organization, and they are the people who make things happen day in and day out. Goodwill’s accomplishments are really the sum of their accomplishments.

From time to time I am reminded of how fortunate – even blessed – we are to have so many terrific people. For example, this year we are opening four new Excel Centers – diploma-granting high schools for older youth and adults. Our talent sourcing staff posted 68 positions we needed to fill, and the response was amazing. We received approximately 3600 applications that our staff reviewed. They asked 728 of those applicants for additional information, then conducted nearly 400 telephone interviews. From those, approximately 100 were interviewed in person by a panel of staff, and 68 persons were hired. It is particularly reassuring to me that so many fine people want to be part of the work we are doing.

Another recent reminder came from visitors from a Goodwill organization in another state. They spent two days touring our operations and talking with our staff about their work. During those two days they repeatedly told me how impressed they were with the caliber of our people – at every level and in every place they visited. The fact that visitors who have seen many Goodwills and who themselves operate a very fine organization would make so many glowing comments about our staff meant a great deal to me.
What’s the key? We don’t really have any “secret sauce.” Perhaps it’s a different key for different people, and perhaps it’s the sum of several elements that might include:

  • A mission and a variety of services that are easy to become passionate about. There’s generally a pretty strong feeling that what we are doing is important and is helping others improve their lives.
  • A culture that insists on treating everyone in a respectful manner. This means in every direction – up, down, sideways, with those who are inside the organization and with those who aren’t.
  • A genuine desire to provide people with the resources they need so they can do their jobs well and to provide learning and growth opportunities for our people.
  • A strong effort to provide safe working conditions that are bright, clean, and pleasant places to be. Of course, a pleasant place to work is in large part a function of having people who are pleasant to be around – most of the time, at least.
  • A genuine desire to improve – to become more effective at accomplishing our mission, to achieve better results, and to be better stewards of all our resources.

We don’t always succeed at all of this. We’re human and we make mistakes. But the positives far outweigh the negatives, and the culture in our organization today is many times better than it was early in my career when we were much smaller. I’m very aware that with over 3,000 employees spread across approximately 80 locations, the potential for that culture to deteriorate is always present. But when I see the kind of work that goes into selecting new staff – for example, the kind of work demonstrated in filling those 68 new positions in the Excel Centers – and I see the caliber and ability of those who have recently joined our organization as well as those who have been with us for much longer – I know we’re in good hands and I’m confident the future is bright.