Posts Tagged ‘for profit social enterprise’

What does Timor-Leste Transparency have to do with being a Social Enterprise?

Friday, August 26th, 2011

Doug Hadden, VP Products

The Government of Timor-Leste has taken another step towards leading-edge government transparency with the launch of an eProcurement portal. The Timor-Leste transparency portal was first launched in March of this year with budget transparency. The World Bank has commended the government commitment of revenue transparency as the first country in Asia/Pacific to fully support and be certified for the Extractive Industries Transparency Initiative (EITI).

What does this mean for Corporate Social Responsibility (CSR)? How does it align with being a social enterprise?

Real Social Responsibility

There is a debate about CSR. Critics suggest that CSR is fake, just feel-good marketing. Others see CSR as a cost with few benefits. My sense is that what we understand as CSR is maturing to something else. There is a significant difference between how social enterprises like FreeBalance approaches the world compared to companies who sell similar software.

For example, there is a well-known software company sponsoring a yacht in a famous yacht race. (FreeBalance sponsored a 5K run to raise money for cancer research). Another well-known company uses some social responsibility to purchase modern art. (FreeBalance collects art from children as SOS Children’s Villages). Why the difference? Social responsibility is at the core of what we do: helping country growth through improving governance.

Making a Difference as an Innovation Motivation

Umair Haque has made a strong case of meaningful and sustainable capitalism. Followers of his blog entries and twitter feeds often disagree with this notion. Yet, I see it almost every day at FreeBalance.

A colleague at a company I worked for previously confided in me: “what am I going to tell my grandchildren, that I helped insurance companies become more profitable?” Don’t get me wrong, my time with that company was rewarding. I learned a lot and made some lifelong friends. However, the motivation to innovate was intellectual. We didn’t internalize the angst of insurance company executives. Working long hours, as we often did, was not a cause of celebration. I rarely woke up at 3 in the morning with eureka moments. (Mostly nightmares.)

Yet at FreeBalance, we’re actually doing something meaningful. Our teams in Canada, Portugal and Timor-Leste worked around the clock. They did so because they believe that this contribution will have a cumulative effect in making the lives of the Timorese better. And, consequently, the world a better place.

Yes, but what about the Business?

Our transformation from a traditional software vendor to a For Profit Social Enterprise (FOPSE) has resulted in more profit and rapid growth relative to the industry. It seems to be superior to the traditional notion of “the business of business is business.”

And, it’s not because people are motivated to work harder – rather to work smarter.

What happened to that company I worked for? After a series of acquisitions, they are part of that software company that sponsors the yacht.

FreeBalance Company Update at FISC 2011

Monday, January 17th, 2011

Manuel Pietra, FreeBalance President and CEO, provided a company update to delegates at the FreeBalance International Steering Committee (FISC) conference in Madeira Portugal. He spoke about the purpose of FISC – to drive the priorities for the FreeBalance Accountability Suite and to act as a forum for knowledge transfer among Public Financial Management (PFM) practitioners. He described the use of the   6 Thinking Hats parallel thinking approach for arriving at decisions.

Priorities

Mr. Pietra described the evolution of FISC since 2007. He welcomed first-time delegations from Kyrgyzstan, Liberia and Uganda. FISC was augmented in 2010 to include Ministers of Finance. This program will continue for every two years.  The FISC conference is the most important event for aligning product development with international customer requirements. The FreeBalance Government of Canada Cluster has a similar role to FISC but with more opportunities to connect.

FreeBalance adjusted the program to meet customer priorities from FISC 2010 and FreeBalance surveys. FISC 2011 objectives include assisting governments to leverage the latest technology and to align products with needs for the coming two years. Mr. Pietra described the differences between steering committees and user groups. There are Minister’s meetings every 2 years with extended sessions.

Successful 2010

FreeBalance continues to grow at above average rates. New offices were opened in 2010. The employee base has also increased. Mr. Pietra believes that the customer-centric approach taken in mid-2006 has assisted the company to grow. This reorganization into a matrix with a single development, implementation and support process has enabled FreeBalance to be customer-driven. He described some of the latest initiatives in customer-centric development including the full use of the balanced scorecard methodology that aligns customer measurements with financial, internal process and learning metrics.

Some of the FreeBalance highlights of 2010 include:

Corporate Social Responsibility

As a For Profit Social Enterprise(FOPSE), FreeBalance strives to make a difference in the world. Unlike most companies, Corporate Social Responsibility (CSR) is core the FreeBalance mission to help governments across the world leverage robust government financial management technology to accelerate country growth. He described how the balanced scorecard and triple bottom linereporting is assisting FreeBalance to achieve mission objectives.

About FISC

The annual FreeBalance International Steering Committee (FISC) conference runs from January 16 – 19, 2011 in Madeira, Portugal. FISC provides an interactive forum to exchange Public Financial Management (PFM) good practices among international customers and PFM thought leaders. FISC drives the FreeBalance Accountability Suiteproduct vision to direct FreeBalance GRP solutions. Previous FISC events were held in Mt. Tremblant, Canada (2010); Prague, Czech Republic (2009); Cascais, Portugal (2008); and London, United Kingdom (2007).

Maturing of Corporate Social Responsibility

Friday, August 6th, 2010

Doug Hadden, VP Products

Many observers see the British Petroleum (BP) oil spill as a seminal moment in Corporate Social Responsibility (CSR).  Chrystia Freeland in the Washington Post has gone so far as to suggest that CSR has finally been exposed as the “fetish encouraged by the philanthropies that feed off it and funded by the corporate executives who have found that it serves their bottom line.” Beyond Petroleum, the BP CSR campaign tag line went well beyond. There seems to be no top kill to stop the big blog spill. The CSR blog reaction firestorm has been illuminating. Many observers have presented some thoughtful analysis of what the gulf spill means to CSR. (More on that later.)

CSR is a relatively new concept. It is fraught with confusion because many observers can’t visualize how being corporately responsible can be anything but expensive (and pretentious). Others, see it as a marketing ploy by greedy business. Or a misguided hippie 1960s flashback. Or Scrooge-type guilt. Or the latest business fad.

I’d like to suggest a framework to visualize the evolution of CSR.

Stage 1: The Business of Business is Business

(Follows Milton Friedman’s famous viewpoint).

  • Realization: Business leaders recognize the Profit is required to sustain business.
  • CSR POV: CSR is a cost and serves no useful purpose to increase profitability and does not add to shareholder value.
  • CSR Risk: Government regulation means the business must be in “compliance”.
  • CSR Threat: There is risk that competitors that practice CSR may gain competitive advantage.
  • CSR Opportunity: Fake Social Responsibility marketing efforts.

Step 2: Business Embraces CSR

  • Realization: People and Planet sustainability is required to sustain Profit in the business. Exploiting the environment will result in loss of necessary resources for the business. Exploiting people will result in less customers. 
  • CSR POV: CSR increases profitability because it grows the supply chain and ensures enough customers.
  • CSR Risk: The holistic view of environmental and social sustainability leading to sustainable business is difficult to measure. Business needs to improve outcome measurements.
  • CSR Threat: CSR arms race develops. Large enterprises can leverage high profits for philanthropy. On the other hand, marketing noise can make it difficult for buyers to know the difference between real and fake CSR.
  • CSR Opportunity: People prefer to buy from ethical businesses.

Step 3: For Profit Social Enterprise (FOPSE)

  • Realization: Profit drives innovation
  • CSR POV: Profit can be a more effective feedback loop for success in solving social or environmental issues. FOPSE may be more effective than the non-profit model for solving some issues.
  • CSR Risk: FOPSE requires questioning traditional business models. (In this case, BP must not only be “beyond petroleum” but petroleum free.) FOPSE companies compete against mainstream organizations with well-understood value propositions.
  • CSR Threat: FOPSEs tend to be smaller businesses competing against very large companies. Those larger companies, especially those with real CSR initiatives, can out market FOPSEs.
  • CSR Opportunity: FOPSE is disruptive and can create sustainable competitive advantage.

FreeBalance FOPSE Experience

FreeBalance is a For Profit Social Enterprise (FOPSE) software company that helps governments around the world to leverage robust Government Resource Planning (GRP) technology to accelerate country growth. Our mission is governance because good governance is required for economic development. We’ve published a guide on how to become a FOPSE. Here’s our experience to date:

  • The CSR exercise helped FreeBalance to change the traditional business model used by software companies.
  • The customer-centric approach needed as a FOPSE has helped FreeBalance  grow significantly while competitors have stagnant results.
  • The FOPSE approach has been very successful to differentiate FreeBalance globally.
  • CSR is positively related to profit.

How to Become a for-Profit Social Enterprise (FOPSE)

Leadership Lessons Learned

Thursday, May 6th, 2010

FreeBalance President and CEO, Manuel Pietra, has been nominated for the for Peter Brojde Award for Next Generation Executive Leadership by the CATA Alliance.

How has Manuel achieved profitable and responsible growth for FreeBalance? Manuel has 3 lessons learned:

  1. Decision-making tools
  2. Customer-centricity
  3. Social responsibility

Decision-Making Tools

FreeBalance leverages the “Six Thinking Hats” approach developed by Edward de Bono. The company was organized like most software companies when Manuel joined in March 2006.  The organization structure needed to adapt to better serve the market. And, the company needed to make numerous strategic decisions. Manuel assembled the management team. He provided training materials on the technique. He described some high level objectives. Then he left the room. Manuel believes that executives gain more control by relinquishing control.

The 6 Hats technique is used throughout the company and with customers. Members of the FreeBalance International Steering Committee leverage the technique when prioritizing product roadmap items.

Customer Centricity

Most software companies are not customer-centric.  Manuel realized that traditional operational processes used by software companies can result in inferior service and put barriers between  company and customer decision-makers. We reorganized the company and provided customer metrics as the main dashboard for success. We’ve written a lot about customer-centricity in the past.  Initiatives such as the FreeBalance International Steering Committee (FISC), support SWAT Teams and the FreeBalance Customer Exchange have improved support and products. This has aided our growth.

Social Responsibility

Many traditional business leaders believe that Corporate Social Responsibility (CSR) is company cost. Companies that engage in CSR risk profits. Manuel advocated the move to a For Profit Social Enterprise (FOPSE) where CSR is core to company decisions. We’ve talked about the benefits of this approach. We’ve even published a white paper on how to become a FOPSE.  The business media has been interested in this approach Manuel has explained how FOPSE companies are able to effectively achieve social goals and achieve growth.

FreeBalance Publishes Whitepaper: How to Become a For Profit Social Enterprise

Saturday, December 19th, 2009

Manuel Pietra outlines business case for establishing corporate social responsibility as the core of the enterprise

FreeBalance, a For Profit Social Enterprise (FOPSE) software company that helps governments around the world to leverage robust Government Resource Planning (GRP) technology to accelerate country growth, today announced the launch of a whitepaper titled “How to become a For Profit Social Enterprise (FOPSE)”. The whitepaper provides the business and ethic case for making Corporate Social Responsibility (CSR) core to company strategy.

The genesis for the FreeBalance paper was a series of oversubscribed articles from the FreeBalance Sustainability Blog. The FreeBalance Sustainability Blog, articles received substantial interest and attention from social enterprises and the broader public financial management community. The FreeBalance whitepaper outlines the FOPSE business model and identifies the critical factors to transform an existing enterprise to a FOPSE. Companies who become FOPSE commit to CSR as core to their business models.

“Building socially conscious organizations is a business imperative with global consequences. This type of social entrepreneurship amplifies the impact of corporate social responsibility,” said Manuel Pietra, President & CEO of FreeBalance. “FreeBalance is dedicated to helping governments around the world accelerate country growth with sustainable GRP technology. Good governance and achieving development goals directly impacts local economies and the lives of each citizen. Social responsibility is integral to what we do. That’s why we operate with a customer-centric approach.”

FreeBalance has successfully transitioned to a FOPSE by directly impacting the civil service and citizens in customer countries. FreeBalance GRP solutions are now used by 25,000 civil servants in Canada and 35,000 civil servants internationally. FreeBalance software solutions are being used to manage a global workforce of nearly 1.5 million civil servants and a quarter trillion dollars in annual budgets worldwide. The FreeBalance Accountability Suite has now been implemented in 18 countries across 15 different time zones and in more than 200 government entities at the national and sub-national level.

FreeBalance contributes to customer country economies by forming local partnerships and hiring citizens ensure independently sustainable implementations. FreeBalance GRP technology accelerates country growth and helps improve governance, demonstrate accountability in public finance and bolster citizen confidence through transparency. Public financial management reform is a key element of good governance and sustainable development. FreeBalance is also committed to supporting children’s programs in the developing world. FreeBalance has established partnerships with organizations such as SOS Children’s Villages to directly impact the lives of thousands of children. FreeBalance recently had a unique opportunity to make a difference in the lives of 1,283 school children in Timor-Leste.Under the leadership of Manuel Pietra, President & CEO of FreeBalance, the company delivered 1,283 packages of school supplies to the Escola Primária de Fatuada in Dili.

FOPSE embodies the FreeBalance commitment to international development, active participation in the global community, and social responsibility. There has been a major shift in business thinking over the past decade. Today’s businesses have a global impact and should be stewards of social responsibility in the countries where they conduct business. CSR is at the forefront of the minds of executives, entrepreneurs, professors and students. Diana Middleton of The Wall Street Journal published a comprehensive account on grassroots social conscience mandates of future executives around the world in an article titled “M.B.A.s Seek Social Change.”Harvard professor Daniel J. Isenberg recently published a critical study which defines how FOPSE extends CSR to the core of the enterprise and distinguishes FOPSE from traditional for-profit company programs.

FreeBalance has embraced FOPSE and published this whitepaper to encourage entrepreneurs to consider this approach.

FreeBalance_FOPSE_2009

About FreeBalance
Founded in 1984, FreeBalance is a For Profit Social Enterprise (FOPSE) software company that helps governments around the world to leverage robust Government Resource Planning (GRP) technology to accelerate country growth. Proven FreeBalance GRP products and focused methodology supports financial reform and modernization to improve governance, transparency and accountability. Good governance is required to improve development results.

FreeBalance is headquartered in Ottawa, Canada, with sales and support offices in Washington, DC (United States), Lima (Peru), Lisbon (Portugal), London (Great Britain), Pristina (Kosovo) and St. John (Antigua and Barbuda). FreeBalance solutions have been implemented in countries across the globe, including Canada, United States, Sierra Leone, Guyana, Pakistan, Mongolia, Afghanistan, Antigua & Barbuda, Timor-Leste, Republic of Kosovo and Panama.

How to Justify Corporate Social Responsibility (CSR) Programs, Part 5

Tuesday, November 3rd, 2009

The Business Case

We continue our series to help you justify CSR programs. This part focuses on the cold hard business case. (Our previous entries spoke about wicked problems, CSR business trends, ethical issues, and risks of not adopting CSR. We also presented the case for becoming a For Profit Social Enterprise or FOPSE.  And, we pointed out that CSR is not about exploiting untapped markets.)

Recruiting and Retaining Talent

 It is no surprise that a 2007 Globescan report found that over 90% of employees were more motivated when working for companies with CSR programs. The latest generation of workers seem less motivated by money – “making a quick buck”, than previous generations. There is a new spirit of combining “doing well with doing good”.

Increasing Profit

There is insufficient data to prove that companies that are socially responsible generate more profit or more net worth than companies that are not. Yet, many believe that CSR improves company reputation and improves revenue:

There is a significant difference in results among industries. The Edelman Trust Barometer found that some industries enjoy better reputations than others. It is clear that many CSR programs appear to be marketing campaigns more than core social responsibility. Some companies are deeply involved in industries that generate pollution, exploit workers in emerging countries or leverage shady financial instruments. It is difficult to trust these companies, so the uptake of CSR programs to generate more business is limited. It should be noted that many companies have turned the corner finding green energy, improving plight of workers world-wide and making financing more accessible.

CSR is a clear business trend. There remains skepticism that these programs can result in improved profitability. That’s because CSR is in an early adopter stage. The momentum is there. And the statistics are beginning to prove the value of CSR programs. We caution the reader to recognize that there is a difference between truly being CSR and generating a marketing campaign. Your customers can tell the difference. And, the blogosphere will find out if your program is superficial.

 

How to become a For Profit Social Enterprise (FOPSE)?

Wednesday, October 28th, 2009

More entrepreneurs should consider the For Profit Social Enterprise route. More companies doing “good” should consider this approach. FreeBalance is a For Profit Social Enterprise software company that helps governments around the world to leverage robust Government Resource Planning (GRP) technology to accelerate country growth.

FOPSE is much more than Corporate Social Responsibility (CSR). In fact, it’s more than CSR on steroids. FOPSE is a commitment where CSR is core. We had some difficulty in expressing how this core commitment differs from traditional for profit company CSR programs until we read a landmark study by Harvard professor Daniel J. Isenberg. We knew that we had found our definition. We’re sharing what we have learned.

1. FOPSE requires addressing a social issue as core to the company mission

In many ways, FOPSE companies differ from Non-Profits in only one respect: profit. There must be a social linkage for FOPSE products and services. FOPSE is not marketing – it requires a real commitment.

FreeBalance GRP products and focused methodology support financial reform and modernization to improve governance, transparency and accountability. Good governance is required to improve development results – across all sectors: education, health, economics, etc.

2. FOPSE requires leveraging the for-profit model to improve efficiency and effectiveness

The for-profit model drives company effectiveness because of the competitive environment. Competition means gives customers choice. It improves products and services. It validates that products and services have value.

FreeBalance operates in a highly competitive field of Government Resource Planning. There are numerous IT alternatives for governments. This environment has driven product features and technology choices.

3. FOPSE is global in nature

Professor Isenberg suggests that FOPSE companies must have a global footprint. It may be unrealistic to create a global company immediately. But, FOPSE companies focus on global growth. And, there are many tools available to assist organizations to enter global markets.

FreeBalance has customers in 15 countries around the world. We have at least one Ministry of Finance-level implementation at the national level in every World Bank region.

3. FOPSE requires local delivery

FOPSE companies do not just extend products and services to address social needs. It is more than changing product labels. FOPSE companies deliver products and services directly to the local customer. They do not place a set of intermediaries between the company and the customer.

We’re involved in every FreeBalance GRP solution. We deliver it to governments around the world. We hire local staff to provide on-going support. And, we have set up regional development and support centres around the world.

4. FOPSE requires a customer-innovation approach

Companies traditionally expand globally with existing products and services. These products and services are reluctantly adapted to meet the local context. FOPSE companies question traditional business models and conventional thinking. They do not think about extending markets. They look at the customer context and innovate from there. They must find more ways to engage with customers.

We changed our business model in 2006 to become customer-centric and drive innovation by direct contact with governments. We enabled customers to drive our product roadmap. Our organizational structure was changed. We continue to innovate this ISO-9001/2000 certified process to more effectively meet customer needs.

5. FOPSE means sustainability

FOPSE companies examine the consequences of their actions. FOPSE companies are environmentally conscious. They do not upset the local business ecosystem by putting local entrepreneurs out of business. Their solutions are financially sustainable by customers.

Sustainability is a key theme in Government Resource Planning. That’s why we started this Blog last year. Many of our customers implement GRP using donor funds. But, as World Bank statistics show,  many governments are unable to sustain these solutions when the funding ends. We have been able to improve sustainability through product design and capacity building.

Business Schools Encourage For Profit Social Enterprises (FOPSE)

Monday, October 19th, 2009

The October 15th. edition of the Wall Street Journal had an interesting article by Diana Middleton titled “M.BA.’s Seek Social Change“.  Entrepreneurs are looking to start companies with a social conscience. These entrepreneurs are leveraging the for-profit rather than the non-profit model.

According to Ms. Middleton:

This type of social entrepreneurship – that is, building a for-profit company with a social conscious or linked with a social cause – is becoming increasingly attractive to would-be business founders. The idea is to make money while either directly impacting consumers with its services or funneling a portion of profits to charities. Often, these companies employ people or source resources from economically depressed areas of the world that then also benefit from the charitable donations from the profits.

There has been a major shift in business thinking over the past decades. Businesses have a global impact. Not all entrepreneurs are dedicated to becoming rich at all costs. It’s a far cry from the words of the fictional Gordon Gecko in the movie Wall Street: “Greed is good”.

FreeBalance is a For Profit Social Enterprise (FOPSE) that helps governments around the world to leverage Government Resource Planning (GRP) technology to accelerate country growth. We’re focused on solutions for Public Financial Management (PFM) that helps governments improve governance.  We have a global model with local delivery – often defined as  ”Glocal.” We hire local experts for our software implementations.

We applaud this recognition in the business press about this for-profit alternative model for social causes.  We have found that this model encourages innovation and efficiency.