Hybrid Entrepreneurs: A New Breed of Companies Changing the World for the Better

Say “Hi” to these hybrids

Hybrid entrepreneurs – some call them impact entrepreneurs, responsible-, or even social enterprises – are popping up in all kinds of sectors these days. And they are aspiring beyond profit and the conventional trade-offs found between social, environmental, and economic systems. Take companies like Ecosia who show how to plant millions of trees with a search engine. But relatively unusual for a tech company, it’s not technological innovation that gives them their unique selling point, but instead the promise to do social and environmental good by actively combating climate change.

Hybrids are willing to embrace tensions resulting from efforts to make money to run the business and create social and/or ecological value for society. Serving these two “masters” forces them to juggle multiple goals to truly make themselves different from the for-profit, non-profit, and public organizations you are familiar with.

Making all of this work can be easier said than done. Just how do they serve multiple masters? Hybrids face their own unique multidimensional challenges and specific tensions. Handling them right is the key to their success. And the knowledge about how hybrids do this is very limited.

Under pressure – How to serve (and know) your multiple masters

How do hybrid entrepreneurs bridge the tension gaps they encounter in their operations? One approach is systems thinking. As the founder of farmy.ch, an online platform for consumers who want to shop for regional and ecologically grown food from nearby farmers explained, “People, business, environment, time – it all works like a gearwheel. Also, not only the outcome is important, but also the way of getting there. If one gear moves faster, this can influence other components.” The owner of a sports clothing retailer in Austria (http://www.erdbaer.eu) told us how an “affinity with systemic perspectives” improves the capacity to understand societal problems and find solutions.

Building resilience is another way. For starters, developing activities that are not in complete alignment with a traditional understanding of business requires determination. The CEO of a bank who transformed the value priority towards responsible finance explained: “When I introduced my ideas about changing the way we do financial business, people said that I had my head in the clouds and that I was a wimp. And these were some of the more nicer descriptions people had for me. When critics saw that I was not prepared to give up, they jeopardized some of the projects I was initiating, with some of them withholding information and so on … It was a tough time for me – but I was in the powerful position of establishing the supporting processes and structures (…). And I still hold on to the values that drive us, maybe a bit varied adapted to different contexts, but the core remains.” For-profit hybrids have to build resilience alongside adaptive practices to construct and strengthen individual and collective positions.

Attracting organizational members who are willing to constantly learn and process new knowledge and ideas can be a big help here. Integrative learning is a pathway towards seizing opportunities and co-constructing possibilities to allow for-profit hybrids to develop an integrative learning capacity.

And where would hybrid entrepreneurs be without continual transformation? Cross-vergence orchestration is a tension-spanning micro-foundation that involves the complex managerial ability to foster synergistic interactions between socioenvironmental and economic objectives. A top manager noted the objective “to take a holistic view of the business activities and shape them in a way that is economically, ecologically and socially reconcilable.” Hybrid entrepreneurs tend to enact flexible linking structures as well that increase personnel’s consciousness and buy-in, while allowing for concurrent consideration and management of socio-environmental and market-related expectations. Organizational entrenchment is often applied to sustain continuous transformation processes. One impact entrepreneur explained, “Vague and empty messages like ‘we are a sustainable such and such’ need to be avoided. Instead, we use anecdotes and examples that really happened, and illustrate our efforts which our employees and guests can relate to.”

Organizational boundaries must be liaised across. This requires a kind of allowance for (inter)organizational spaces. The design and development of enabling spaces allow internal and external stakeholders to learn about organizational efforts or provide constructive insights for developing them further. Enabling spaces might be workshops, seminars, and physical spaces for individual or group interaction; or virtual via e.g. online platforms. In their most optimal form, they all foster emotional safety, cooperation, and trust.

And stakeholder-inclusive governance is essential. This pertains to the design of formal, structured, ongoing connections with complex stakeholder networks. Governance processes involve internal and external stakeholders in decisions, including appointing representatives from different stakeholder groups to boards or committees. Many interviewees in our study regarded an inclusive, collaborative stance as a necessary requirement for an organization’s entire value chain.

Making our mark – How can hybrids ultimately compete and persist?

Some managers in our study noted that it could be difficult to believe in the actual pre-eminence of a social or environmental mission. It might be hard to commit to declared multiple goals, live up to the hybrid mandate, and engage in all the scouting, designing, and framing practices required. Yet it’s exactly these kinds of organizational commitments that can enhance resilience and the capacity to cope with tensions, as well as foster learning efforts to spur innovative pathways and help the organization make the most out of sustainability-oriented possibilities. Reflexivity appears to be key here: amplify cognitive distance from routine behavior, and enable and motivate members to develop new meaning, behavior, and/or organizing. With a little luck (and plenty of hard work) you might very well end up challenging the organizational and institutional status quos.

We argue that entrepreneurial hybrids must encourage interactional processes that nurture social and environmental innovations. Entrepreneurial hybrids should seek to develop multi-organizational partnerships and social ties with diverse stakeholders to bridge organizational boundaries and liaise within them. See for instance goood.de. With the “goood mobile” project, the company offers internet and phoning at affordable prices. And 10% of the proceeds are donated to ecologically or socially sustainable projects of non-profit organizations (www.goood.de). Making their business case work means they are actively involved in cooperation with other partners in the ecosystem, give lectures on sustainability, coach ecological and social initiatives in scaling, and try to support a system change towards more ecological and social sustainability.

Our study drives towards an idea we’re very excited about: for-profit hybrids and their practices might provide sufficient occasion to re-examine the notions of (sustainable) value chains. Re-evaluation of the own company? Maybe even a paradigm shift? With the potential energy of these organizations, we can say with confidence: Yes to everything.

For more information, check out our article on Serving Multiple Masters: The role of micro-foundations of dynamic capabilities in addressing tensions in for-profit hybrid organizations by Vallaster, C., Maon, F., Vanhamme, J. and Lindgreen, A. (2019): http://journals.sagepub.com/doi/abs/10.1177/0170840619856034?journalCode=ossa