Space to Think

So thinking can develop

Purpose, profit and ownership

Some of the more challenging thinking by Charles Handy (see previous post) is on the nature, purpose and ownership of business. As one who has worked for many years with the so-called non-profit sector, I particularly appreciated both Handy’s use of the far preferable term, social enterprises, and his suggestion that “conventional businesses” might learn from that sector.

Social enterprises put their purpose before their profit while recognising that profit is essential to their survival and growth; it is, as they see it, a tax on the present to pay for their future. More conventional businesses may one day begin to see things the same way.

It is surprisingly rare, in my experience, for business and management leaders to look to the not-for-profit sector for insight and best practice. I recall telling some learning and development colleagues once that I was on a course on aspects of “not-for-profit” management; they retorted with amusement and the question, how hard can it be to not make a profit?

Handy has identified one of the crucial issues in a social enterprise. The commitment to purpose, while living with the reality of needing to ‘trade’ at a profit in order to sustain that purpose.

The other area that is very acute in social enterprises is the question of ownership. In a community organisation or not-for-profit enterprise there is often quite intense expressions of ownership; sometimes, indeed, expressions of ownership that seem obstructive or counter-productive. Ownership is typically distributed among a loosely or unorganised group of supporters who may make up for what they may lack in structure or formal processes with passion and integrity of purpose. One of the challenges I find working with social enterprises is that sometimes individual or sub-groups of supporters may confuse their commitment to the purpose of the organisation with the established ways of pursuing that purpose. Working for change in these organisations requires clear articulation and strong reinforcement of the fundamental and enduring purpose before it is possible to negotiate practices, structure or branding. If the ‘owners’ suspect that the vision has been lost sight of, no amount of promise of greater ‘success’ or profit will be allowed. It is as if these ‘owners’ feel a solemn trust as guardians of a long-term quest and they will not allow that trust to be broken on their watch for any short-term goal or gain.

Charles Handy reflects on some of the destructive aspects of our concept of ownership of businesses and compares it with the sense of purpose in social enterprises.

The old idea that companies exist to make money for their so-called owners is slowly going out of fashion. A business is, properly, a servant of society, a society of which the owners are a part but not necessarily the main part. …

If we don’t own things like land and companies but only hold them on trust for society, for their members and future generations, then, just perhaps, we might begin to think differently, less selfishly and short term, more considerately of others.

….

Then, just maybe, corporations will begin to be seen as the trustees of our future, which the best of them already are.

Handy seems to emphasise that it is the very concept of ownership as it functions in business that leads to short-term thinking and management, unethical practices and disregarding social, environmental and personal costs.

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January 16, 2008 - Posted by | Charles Handy | , , , ,

2 Comments »

  1. Graeme,
    Were you able to catch the webcast we did with Handy?

    It is now in our archive:
    http://www.amanet.org/editorial/webcast/2008/charles-handy.htm

    As is a podcast of extra material:
    http://podcast.amanet.org/edgewise/leadership/58/charles-handy-on-youdaimonia-and-other-important-matters/

    Cheers!
    Terry

    Comment by Terrence Seamon | February 21, 2008 | Reply

  2. Thanks Terry
    I didn’t catch this earlier, but have just listened to the archive version. Very worthwhile. Of course it covers a lot that is also in the latest book, but some warmly and engagingly put and some great anecdotes and evocative phrases. Thanks for making this available and spreading the word.
    Graeme

    Comment by Graeme | February 24, 2008 | Reply


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