Our lessons from the race for scale
Posted: 02 Aug 2011
HCT Group is a social enterprise in the transport industry and we are actively seeking scale. We have grown by over a hundredfold since 1993 – from a turnover of £202k to a turnover of £23.3m in 2009/10. We're not done yet. We aim to double in size every five or so years for the foreseeable future.
For us, scale is crucial. The better we do commercially, the more we can do for the communities we serve as a social enterprise. We also compete for contracts against the giants of the transport industry in a marketplace that strongly rewards economies of scale. Not every social enterprise seeks this kind of growth - but for those that do - these are some of the ideas that have helped us to get this far.
Rethink your governance
In many third sector organisations, the job of the board is to hold management to account for the responsible use of donor funds, where risk is to be mitigated at worst and eliminated at best. This is simply hopeless for rapid growth – growing to scale will always be both risky and difficult. The job of the board in a commercial firm is very simple – maximise shareholder value. Risk is accepted as part of the environment and is actively managed, making rapid growth that much easier.
Social enterprises are going to need a different idea if they are to attain scale. We believe that the job of our board is to ensure that we maximise the good that we do. All the decisions that we take about growth, how we manage our business and how we use our resources are set against this yardstick.
As a specific goal, "maximising the good that we do" allows us to be as bold as a commercial firm, but to the benefit of our communities, not to the owners of capital. It also has the advantage of keeping our social mission absolutely central to our approach.
Win through your people
I started out in life as a miner, so leading the organisation as it achieves new scales and faces new challenges is a daily education for me. I have learned to hire and then unleash talented people. I have always accepted that some people are better than me at certain things, some are just plain smarter and some are gifted in their particular specialism in ways that I would struggle to grasp.
Leading people like this involves buying them into the mission of the organisation, focussing them on your strategy for getting there and ensuring that you develop them so that they can reach their potential. After that, your role is to enable them to do their thing.
Always ask "what's next?"
HCT Group is a profoundly different organisation now to how it was just 6 months ago. I have been saying this every six months for the past 10 years. Approaches that work fine today for our business will start holding us back tomorrow.
One of our constant questions is "is this appropriate for our current scale?" Is it time for the next bits of IT infrastructure? A specialist HR function? Standardised processes? Does our community accountability still work? Answer these questions incorrectly and you slow growth by either not having things in place when you need them or by investing too early when you need the resources elsewhere.
When the pace of growth to scale is unrelenting, this also has profound implications for your organisational culture. We encourage our staff to understand that there is no "steady as she goes" as we all need to keep thinking about what the next steps are going to look like. We also try to 'punch above our weight' in how we speak and think, talking the organisation ready for its next set of tasks.
Get the business in
Fear of hubris always makes me slightly nervous writing "secrets of our success" articles. However, there is one key lesson from our race for scale that will be true in all times and in all industries. Stay hungry to win the new business and then deliver on it, building your reputation for high quality time after time after time. That is where the growth will come from.
And finally – enjoy it! It's so much more rewarding than spending your days "maximising shareholder value", whatever that means.
This post first appeared on the Guardian Social Enterprise Network blog on Monday 28 February 2011