Financial and Human Capital - Panel Discussions from the SIRG ...

This is the first of the SIRG-Taiwan White Papers from Pathways and Barriers to Social Enterprise Development, its inaugural symposium on social enterprise. This week, they are being published on SocialFinance.ca.

Panel 1: Financial and Human Capital

Panelists: Johnny Wang, iHealth; CT Liu, Taiwan Up Project; Patrick Wang, Aurora Social Enterprise
Moderators: Melinda Jacobs, Remi Kanji

In building and scaling a social venture, financial and human capital are intrinsically linked: both elements are not only required for organizational growth and health, but also mutually dependent. The panel on financial and human capital explored these adjacent topics, presenting panelists with the question: How do you balance human and financial capital needs in your organization, and how should Taiwanese social entrepreneurs broadly address these challenges within their own organizations?

The following themes became salient points in our discussion:

1. Timeliness of external funding
2. Importance of synergy partnerships
3. Resources for founders and social entrepreneurs to grow and develop
4. Building teams that grow with their organization
5. Driving social enterprise through youth and mentorship
6. Alternative needs for hierarchy in social ventures

Timeliness of external funding

Although funding for social enterprise is important, the panel advised against accepting venture capital at the very early stages of venture growth.

Firstly, the timeline for ROI may be different and unaligned with the venture?s social mission, and secondly, premature funding could delay iterative learning and delay financial sustainability. Ventures need to test assumptions and perfect their financial model before deciding which model to scale through financing.

It was suggested that early stage support for social enterprises take the form of orders or sales that would allow for supply chain development and social value testing.

Modeling funding after startups: Organizations should be given limited early stage funding, giving them time and space to test and iterate, but not scale their organizations. Investors and donors should organize financial capital infusions in accordance with an organization?s growth stage.

Where possible, social enterprise should rely on sales for survival, and investment for scaling.

Importance of synergy partnerships

Synergy partnerships should be considered alongside investment for growth. Synergy partnerships refer to situations where a larger and more experienced company invests time and human capital into a younger and newer partner, often in exchange for an equity stake.

They provide initial human and financial capital infusions to an organization, and their existing relationships and reputation can help new entrants gain customer and partner trust more rapidly. Synergy partnerships also facilitate the transfer of expertise and tacit knowledge from a more established organization to a new one, essentially providing inter-organizational mentorship.

Organizations with parallel social missions should collaborate to gain some of the same benefits derived from collaborative partnerships.

Collaboration: Whether through a synergy partnership, or alternate collaborative relationship, organizations can leverage joint human capacity to implement a social mission or build a better business. Social enterprises should seek to identify and nurture new nodes of cooperation.

Resources for founders to grow and develop

Building any new venture is challenging; building a social venture is doubly challenging. Some of the most important early stage support should be designated for founder development. Effective early stage leadership is crucial to helping a founder build his or her team, but this capacity does not come naturally to many people. Moreover, because founders are balancing social and financial missions, they may find that their skills are lacking in one area or another.

Access to resources: Founders should have access to resources that grow their business, social programming, and/or leadership skills. Though founders are pressed for time, they should set aside time for personal development - their organization will grow faster if they take the time for self-improvement.

Building teams that grow with their organization

The best resource for a social venture is a strong and committed team. However, in the absence of high wages, other factors like quality of living and mentorship can help leverage hiring capacity. Better hours, rewarding work and the chance to grow with the company can be used to attract and retain talent.

It is important for employees to be empowered in their roles ? co-founders should allow them to learn by doing and make mistakes, so they can better identify both problems and solutions in the future. Teams need to see improvement in themselves and others and learn to juggle multiple stresses at once.

Investing in employee potential: Organizations need to consider non-financial incentives to encourage employee happiness and commitment.

Driving social enterprise through youth and mentorship

Youth need to be exposed to the challenges of entrepreneurship early on. Some advocate the merits of failure as a learning tool, while others advocate for exposure to new issues not commonly experienced in home and school life as vehicles for learning. It was agreed by both sides that attitudes change when there is a feeling of contribution.

Mentorship and mobilization: Mentorship within organizations and between generations is key to growing talent. Evaluating younger staff by outcomes such as personal growth rather than solely performance can encourage multidimensional learning. Moreover, encouraging youth leadership within organizations can help develop entrepreneurial characteristics.

Alternative needs for hierarchy in social ventures

Social ventures need dynamic structures with less hierarchy, to encourage value creation and learning within teams, who come from diverse backgrounds and bring different skills. Because of the need to share value and leadership throughout the organization, co-working models can be more effective than hierarchy and specialization.

Coworking: Social enterprises should forgo hierarchical organizational models for coworking or collaborative models, which better leverage limited human capacity.

Conclusions

When considering the link between financial and human capital, social enterprise should be considered as a system ? not a series of individual organizations. The Taiwanese ecosystem needs to leverage its current resources and create new ones through collaborative partnerships, a higher threshold for risk, and building strong and growing teams.

Talking about individual competencies and organizations risks failure to leave behind a new generation of systems organized around the creation of financially sustainable social value.

Source: http://socialfinance.ca/blog/post/financial-and-human-capital-panel-discussions-from-the-sirg-symposium

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