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Want Your Social Enterprise to Succeed? Manage Your Friends and Foes

Bureaucratic headaches happen in every country. Social enterprises are particularly vulnerable to such obstacles, especially if the start-up disrupts the status quo and must then defend itself against resistance by entrenched interests.

Bureaucratic headaches happen in every country. Social enterprises are particularly vulnerable to such obstacles, especially if the start-up disrupts the status quo and must then defend itself against resistance by entrenched interests. Every one of our projects has been hampered by one or more instances of official inertia, lack of support, bureaucratic foot-dragging, or even outright corruption.

You might, for example, complete all the appropriate application forms to receive a permit to start a business or enlarge a building, only to be told no by the local authorities, with no explanation as to why. In one case, an entrepreneur we were working with attempted to meet a senior government member on six occasions over as many months, only to have every confirmed meeting postponed at the last minute. The delays seriously compromised and almost destroyed the initiative.

One social entrepreneur we assisted had an idea that could significantly enhance medical services in a country hard hit by HIV/AIDS. His idea was first to computerize all medical records, eventually build an expert system, and then train nurses to do diagnostic and prescription work, which was being handled by the country's limited pool of highly overloaded doctors. To anyone looking from the outside, it seemed like a win-win-win.

Therefore, he was shaken by the negative responses to his proposed idea. Reactions from people in the health department, in local hospitals, and in public clinics ranged from complete indifference to outright hostility. He then learned that two years earlier, a well-established local subsidiary of a multinational software and consulting firm had sold a full-service health care management system to the country's health department. The system had then been force-launched in a number of public hospitals and clinics, at great expense, and was simply not working as hoped. The post-installation challenges had caused major disruptions in health care delivery, thereby creating a highly dissatisfied set of stakeholders, who were justifiably disillusioned and disgruntled.

This entrepreneur was nearly derailed in the very beginning by unexpected negative feedback from key stakeholders. Such poor political savvy has destroyed many a well-intentioned enterprise. That is why every start-up needs a sociopolitical strategy.

Identify your stakeholders.

Think through all the people and organizations that will be impacted by significant success of your venture. Think about parties that will benefit. Think about parties that will experience negative impacts or be inconvenienced. Think about all the parties whose support will be needed but may be indifferent to your cause. Then think about each party's possible reaction, so you can prepare for the resulting inevitable sociopolitics.

Categorize your stakeholders: allies, opponents, and needed indifferents.

Through our experiences in the field, we identified three important categories of stakeholders who could affect the success of your program: potential allies, primary opponents, and needed indifferents.

"Potential allies" are those who will benefit from and may be willing to commit support to your project. These people might be transactional partners (such as suppliers and distributors); leaders in commerce; members of local or national government; NGOs and nonprofits; well-wishers; employees of regulatory or commerce bodies; or local dignitaries, such as tribal chiefs, local healers, or even village elders. Among potential allies, you need to identify those who have meaningful influence in the market/environment of your project, and think about how to mobilize them, since often they will be the ones you'll most need to help you cope with opposition.

"Primary opponents" are those who will be adversely affected or greatly inconvenienced by your project's success and who also have the wherewithal to resist or delay its execution. Primary opponents who have meaningful power and influence must be identified as early as possible so you can prepare to deal with their concerns and reactions.

"Needed indifferents" are people or parties who are indifferent to your project's success but whose support, effort, or resources may be necessary. For instance, a government official responsible for the issuance of permissions, licenses, and certificates. While you may need the license to legally operate your enterprise, the official may have little knowledge of or interest in your beneficiaries or the purpose of your project. Other examples of needed indifferents are suppliers and/or distributors who do not see support of your program as particularly beneficial to them financially. Their supplies may be critical to your operations, but the supplier or distributor may see you as "small potatoes" and not worth the bother of timely support when supplies are short.

As you begin to categorize your stakeholders, beware of overkill: It is easy to spend an inordinate amount of time generating long lists of stakeholders whose actions are unlikely to have a major impact on your success. Confine your list to no more than the eight most important stakeholders. If you can't handle the top eight, your project is likely to be doomed anyway.

Develop a sociopolitical strategy.

The next step is to develop a strategy for mobilizing allies, managing opponents, and converting those who are indifferent. You will need to determine if you have the capabilities to influence these groups. If the answer is that you have no way of coping with the reactions of these stakeholders, particularly opponents, it's a pretty good sign that your enterprise will not be viable—at least not in your desired location at this time. Indeed, we learned from two Wharton Social Entrepreneurship Program projects that failing to plan for these stakeholders can lead to a significant waste of time, resources, and effort.

To develop an effective sociopolitical strategy, begin by methodically thinking through possible tactics for each major stakeholder, following one or more of the six tactical approaches listed here.

  • Clearly specify the response you need from a given stakeholder.
  • Identify major current issues occupying that stakeholder’s attention.
  • Deploy yours or an ally's strategic knowledge, skills, or capabilities germane to the stakeholder.
  • Deploy yours or an ally's physical and financial resources germane to the stakeholder.
  • Deploy your network connections or expanded network connections.

In the case of opponents, find a "safe haven" where you can establish a protected position without provoking immediate hostile opposition.

Each project's challenges, and of course yours, will be unique. For instance, you might very much want to block an opponent but simply do not have the wherewithal to do so. Or you might want to mobilize a potential supporter but are not able to generate interest on their part. Unfair as this may seem, our response to such difficulties is to say, "Life's unfair. Either find another way or stop fruitlessly wasting time and resources. There are other places to invest your time and effort."

We have seen the same missteps time and again. If our decade-plus experience working with social enterprises and studying them in the field isn't enough to convince you, we recently surveyed 300 active and aspiring social entrepreneurs this past summer as part of an ebook experiment we invited the GOOD community to participate in ("The Grave Mistake Many Social Entrepreneurs Make and How to Avoid It"). Those we surveyed—founders, CEOs, executive directors, managing directors, and other leading social entrepreneurs and supporters who hail from both for-profits and nonprofits and from all around the world—named navigating sociopolitics among their top three challenges. Though that may be more tough-love medicine than you are ready to take right now, it can mean the difference between the life and death of your social enterprise start-up. For even more, check out our new book on the subject, The Social Entrepreneur's Playbook.

Image from The Social Entrepreneur Playbook.

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