By Brewster Boyd ’08, Nina Henning ’08, Emily Reyna ’08, Daniel Wang ’08, Matthew Welch ’08
This report explores trends and lessons learned from hybrid organizations pursuing environmental sustainability missions. It hypothesizes that hybrid organizations, defined here as entities that are market-oriented and mission-centered, can positively contribute to some of humanity’s most pressing challenges by deploying their inherent business models. These organizations, which place equal emphasis on their common-good mission and financial performance, blur the distinction between nonprofit and for-profit entities. Building on prior work conducted by researchers on corporate social responsibility, sustainable entrepreneurship, and social enterprise, this research was motivated by a desire to fill a gap in the existing literature on the contributions of privately held, for-profit businesses with environmental sustainability missions.
The research includes an analysis of survey data from 47 hybrid organizations,investigating their business models and strategies, finances, organizational structures, processes, metrics, and innovations. The survey data reveal trends related to the integration of business practices that enable companies to meet both mission and market goals, such as employing innovative products in niche markets,leveraging patient capital to meet non-financial objectives, and encouraging sharedauthority rather than top-down leadership styles. The sample size is biased towardsyoung, small, U.S.-based hybrids, and although respondents show varying levels of profitability, they maintain consistently high levels of integrating environmental sustainability throughout their firms. Moreover, information gleaned from five in depth case studies with best-in-class companies selected from the survey, reveals instructive lessons for hybrid practitioners and researchers alike. These companies demonstrate how to infuse an organization’s culture with its mission, and develop deliberately close personal relationships with suppliers, customers, and share holders. In addition, these case studies exemplify the challenges of patience and limits to growth rate that are common to many hybrid organizations. They also illustrate a strategic trend toward premium product offerings, which allow these businesses to avoid competing on price.
This research suggests that hybrid organizations offer an effective organizational model for contributing solutions to global environmental issues. While there may be limits to the speed of growth or scaling the impact of these organizations, they may also be more effective and self-sustaining than traditional organizations in meeting humanity’s common challenges.