Market-Based Management® (MBM) provides a holistic approach to making decisions, solving problems, and creating value for individuals in your community, team members in your organization, and society at large. In this MBM 101 series, we’re unpacking mental models, ideas, and tools that can help you reach the next level in your work.
The success of every organization depends on entrepreneurship. From small, grassroots nonprofits, to large, established philanthropies, no group of individuals can really impact the world around them unless they are open to new ideas, willing to experiment, capable of taking appropriate risks, and committed to integrity throughout the process.
That’s why, at Stand Together Foundation, we refer to our community of nonprofit leaders as “social entrepreneurs.” If we hope to transform the social sector and break the cycle of poverty, we believe that we must invest in the people who are working against the status quo and charting a new direction.
In fact, entrepreneurship is so central to Stand Together Foundation’s culture that Principled Entrepreneurship is one of our guiding principles. We define Principled Entrepreneurship as maximizing your long-term contribution by continually creating new and better ways to responsibly provide products and services that help people improve their lives. It is rooted in a belief that long-term, mutually beneficial partnerships should be the product of entrepreneurial action.
Effective organizations cultivate environments that actively encourage and support entrepreneurial activity. Without consciously investing in an entrepreneurial culture, it’s easy to lose sight of the impact you hope to have in the communities you serve.
What does Principled Entrepreneurship look like in practice? It starts with a win-win mindset and encouraging your team members to lean into core entrepreneurial behaviors, such as good judgment, responsibility, initiative, critical thinking skills, and urgency. Together, these behaviors generate the greatest possible contribution within the parameters of risk that your organization find acceptable. You, as a leader, play an important role in empowering your team members to adopt and strengthen their intrinsic entrepreneurial instincts.
When nonprofit leaders expect employees to be entrepreneurial and invest in a culture that empowers individuals to act accordingly, their organizations progress toward their long-term goals faster and in unexpected ways. Below are a few characteristics of a healthy entrepreneurial culture. Look for evidence of these characteristics at your own organization—and take note of the gaps you can start to fill in.
- Openness to New Ideas: Your team believes that there is always a better way to accomplish something. Your team members know that seeking out different and new perspectives, ideas, and knowledge (inside and outside the organization) is a part of everyone’s job and will lead to better results.
- Encouraging Experimentation: Team members are encouraged to find new and better ways to advance your vision by investing in well-founded experiments—even if those assumptions or hypotheses turn out to be wrong.
- Learning from Failure: You should strive to avoid failure, but it should be expected. Team members should not be unduly penalized for well-planned experiments that fail, especially if it leads to important learning that otherwise may not have occurred. Progress and innovation take time; this should be considered when holding people accountable.
- Knowledge Seeking and Sharing: Team members consistently seek and share knowledge across all departments and job functions. They seek the best knowledge from all sources in a way that improves decision-making (big and small) around the priorities you are advancing.
- Aligned Incentives: Individuals are recognized and rewarded for experimenting, taking appropriate risks, making improvements, and participating in new initiatives that lead to better results for your organization. Incentives should create a trial and error culture that encourages discovery and learning.
- Committing to Integrity: “How” you achieve results is just as important as “what” results you achieve. Integrity—having the courage to always do the right thing—is at the heart of Principled Entrepreneurship because it is the foundation for trust and win-win relationships.