It’s something that’s often talked about but seldom done in practice, especially in an open session. At EVPA 2016, three funders humbly gave examples their organization’s previous failings and then drew on the lessons learnt. Factary’s Chris Carnie set the ball rolling and invited – well, obliged really – the other session participants to share their own failures with the person next to them and then write up what they’d learned on flipcharts.
Deirdre Mortell of Social Innovation Ireland was the first of the funders to volunteer her story, with a ‘tale of woe’ surrounding a messy exit from an investment in her previous job at One Foundation. They wanted to fund an organization to launch an online support tool for young people with mental health problems.. There was no home-grown model, so they imported one, though things didn’t go entirely smoothly. While the project did well enough in drawing users, it wasn’t having the impact everyone had hoped for. In the meantime, management of the portfolio at One Foundation changed hands numerous time and came at a time when One Foundation had a lot of investments on the go.
In short, the relationship between the Foundation and the investee left something to be desired. At the end of the first round of funding, though the project had not delivered what had been anticipated, One’s management committee decided to reinvest – only to have the decision rejected by the investment committee. The Foundation had no exit strategy, the investee had banked on reinvestment and had furthermore no other funding in place… and they were very angry.
No thanks to One Foundation, as Deirdre Mortell conceded, the investee was still in business, ‘but they don’t talk to me,’ she added wryly. What had happened? One had simply missed the signals. None of the handovers between the various portfolio managers had been very clean and the last one had asked for help but the request had been pushed to one side under pressure of business. The project wasn’t given any attention because it was not either deemed a success, nor a disaster. It was in middle ground, limping along so it had escaped their attention. In retrospect, said Mortell, ‘we should have hired someone to cover the maternity leave.’
Nicole Etchart’s story of failure was more general. As a founder of NESsT, she commented that the key to a successful social enterprise is leadership. ‘If you don’t the right leadership, you’re not going to have the impact you want. You have to pick up early on if the leader can grow with the social enterprise. It’s easy to miss’, she said and NESsT certainly had done so, several times. There were a few warning signs, she said: inability to delegate; being too charismatic for their own good (though, not exactly how she put it).
Social entrepreneurs often attract a lot of attention. It’s easy for them to become distracted by the attention and neglect the business. Finally, innovators are not always the best people to run a company but it’s hard for them to see that, especially if it’s their idea.
Her lesson: you can help train leaders but you can’t fundamentally change them, so you have to find the right leader straightaway. If the right person isn’t there already, succession planning needs to start immediately. Now, NESsT won’t accept an investment, no matter how good it looks, if they don’t see the right qualities in the leadership team.
Caroline Mason said that Esmée Fairbairn Foundation had only recently instituted a systematic means of learning which consisted of a rating system along the following lines: How was EFF’s performance overall? What were the outcomes of the investment? Is the organization now stronger and more sustainable? They had learned a lot through this system of questioning. Especially, they had learned, because if an organization’s revenue-raising model is not close to its core purpose, they often fail.
A group which ran a housing project for refugees had wanted to add a translation business to raise funds (‘I can’t believe we funded this,’ she added with an engagingly frank chuckle). They had no experience, they failed, and Esmée Fairbairn Foundation lost £500,000 very quickly.
What about the rest of us? Spurred on by the panellists’ candour, we bared our souls to our neighbours and then wrote the results on the three flipcharts headed failure of execution, of strategy, and of the organization. Briefly summarized, these charts revealed that above all, you need to do your homework: structuring deals is more complicated than you might expect; you have to know the stakeholders and the areas you’re going into; and you shouldn’t overpromise. One response, especially, captured the group’s attention and admiration: ‘Trust your instincts, investigate your doubts.’ And what failure did I confess? Not telling! It was a good session, though.
People were engaged – more than Chris Carnie, by his own admission, had expected – probably not just because the subject matter was interesting, nor because the panellists had been honest, but also because it involved people as more than just listeners. It was noticeable that the time passed a lot more quickly than it did in some of the other more panel-dominated sessions.
Andrew Milner is an associate editor, Alliance