Thursday, May 24, 2007

OpenTeams as a fourth sector "for-benefit" corporation

The New York Times recently had an article exploring a new "fourth sector" of organizations besides the usual business, nonprofit, and government - what they call "for-benefit" corporations that have a nonprofit type of social mission, but are organized as for-profits for flexibility (because nonprofits are tightly regulated in what they can do).

This is the model I've always wanted for OpenTeams, but I didn't know there were so many others trying to do something similar, or that they had such a name/label. I specifically founded OpenTeams because I've seen so much dysfunction in so many organizations, and I felt software was the best way to promote The Entrepreneurial Organization alternative to really liberate peoples' talent and potential. A more traditional route would have been to earn a Ph.D. in business, write a book, and then start a consulting practice - a la Hammer & Champy, Christensen, or Collins fame (Reengineering the Corporation, Innovator's Dilemma, and Good to Great, respectively). I believe web-based software-as-a-service can facilitate more change more quickly than a book and some consulting.

Here are some excerpts from the article that caught my eye:
“I think what people are increasingly looking for, whether in the for-profit or nonprofit sector, is how you harness the vitality and promise of capitalism in a way that’s more fair to everyone,”...

“There’s a big movement out there that is not yet recognized as a movement,” said R. Todd Johnson, a lawyer in San Francisco who is working to create an online wiki to engage in the give and take of information for what he calls “for-benefit
corporations,” another name for fourth-sector activities.

Consumers, employees, managers and — perhaps most important — investors are driving the phenomenon.

“Young M.B.A. students are not satisfied with going to work for a normal corporation because they are passionate to do good in the world and do it in business,” Mr. Johnson said...

Still, whatever participants call it, the fourth sector faces challenges. Current legal and tax structures draw strict lines between for-profits and nonprofits, and fiduciary obligations prevent asset managers from making investments with any aim other than maximizing profit. The social benefits that fourth sector firms seek to unlock are not easily quantified and often take decades, not quarters, to attain.

“You run into fundamental problems in trying to grow good because neither for-profit nor nonprofit is set up to do what new entrepreneurs and others are trying to do — namely, harness the power of private enterprise to create social benefit,” ...

“Companies like us have no conventional road map to follow in building our businesses and thus are greeted with a lot of skepticism,” (check!)
The article goes on to give examples of some organizations, and talks about the many complications, especially financing. It's definitely worth reading the whole thing. But even with the obstacles, it still felt good to find out there are others with similar aspirations to mine.

No comments: