Innovating the Hybrid Organization

One of the great questions in business and government today is finding an optimal balance between commercial and social objectives. The traditional capitalist model has generally been governed by the assumption of independence of commercial revenue and social value creation. Perhaps the most egregious expression of this position is Nobel laureate Milton Friedman’s observation that the only “social responsibility of business” is to “increase its profits” for its shareholders. But as Professor Julie Battilana of the Harvard Business School and others are pointing out the independence of social value and commercial revenue creation is largely a myth. “In reality,” she argues “the vectors of social value and commercial revenue creation can reinforce or undermine each other.”
 The emerging ideal is a “hybrid organization” where “managers do not face a choice between mission and profit, because these aims are integrated in the same strategy.” Although as hybrid species in nature hybrid organizations can be a fountainhead of innovation, many significant challenges face business leaders, entrepreneurs, and policy makers at the frontier of this new and exciting field.
 The goal of this project is to make available the BHI Platform and Codex to those seeking to be more informed about this space and who themselves face innovation challenges. This will include the top management of companies in all sectors whose companies are struggling with how to become more socially conscious and relevant, and on the other side for the directors of non-profit organizations and enterprises, including foundations, that are increasingly recognizing that integrating commercial revenue generating mechanisms can powerfully advance their own philanthropic mission, such as assisting their grantees to achieve financial self-sustainability.

Some Critical Questions:

  • What is the optimal legal structure to achieve the hybrid ideal?
  • How to reevaluate and structure risk/return in hybrid organizations in a way that will attract significant amounts of capital?
  • How to make customers and beneficiaries indistinguishable?
  • What metrics and accounting systems can best recognize social and financial value?How to enable social enterprises, both commercial and non-profit, to scale by inventing more efficient ways to allocate over $ 700 billion in foundation assets and huge corporate reserves to hybrid enterprise purposes?
  • How to spark a continuous stream of innovations and attract a new generation of entrepreneurs to this fascinating new space?
Professor Battilana continues: “Someday, we may look at the advance of hybrid organizations as an early step in a broad reformulation of a current economic order, which for all its successes has left many disenfranchised. Hybrid organizations offer a bold, sustainable infusion of humanitarian principles into modern capitalism.  BHI’s model which couples neuro-science and other new frontiers of science to a breakthrough collaborative innovation model, supported by an advanced crowd intelligence platform and codex, offers one practical solution in one of the most interesting and controversial emerging conversations in the 21st century.

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References:

The Competitive Advantage of Corporate Philanthropy 
In Search of the Hybrid Ideal - Stanford Social Innovation Review
Social Enterprise in Context
What is a Hybrid Organization?
The Social Entrepreneurship Spectrum: Hybrids - Inc.
Entrepreneurs an the 'Hybrid' Organization - Forbes
Social Impact Will Bed the New Venture Capital
John Fulwider on the Potential of Nonprofits with For-Profit Business Models
Creating a Hybrid Non-Profit / For-Profit Social Enterprise Structure
Cross the Line: How to Start a Nonprofit with a Hybrid Revenue Strategy