What are the benefits and challenges of using a hybrid business model for social enterprises?

Absolutely, a hybrid business model in social enterprises does indeed offer a multifaceted approach to achieving both social and financial objectives. This duality allows for a broader impact spectrum, catering to diverse customer segments while maintaining financial viability. The cross-subsidy element you mentioned is particularly effective in creating inclusive solutions that address various socio-economic strata. However, it's crucial to maintain a delicate balance. Overemphasis on the for-profit side can dilute the social mission, while leaning too heavily on the non-profit aspect might jeopardize financial sustainability. The key is in strategic alignment and clear communication of the value proposition to each segment.

As the spread between the rich and poor has increased and the opportunities for middle-class citizens decreased, consumer attitudes around unfettered capitalism, the free market economy, and unregulated wealth accumulation have changed. Increasingly, consumers want to know what companies are doing for their communities outside of making a profit for a narrow and exclusive group of early investors, VCs, and unicorn-seeking profiteers. And while Wall Street may not demand change, more consumers are voting with their dollars and adding a social mission to their selection criteria. The value equation for companies needs to include a broader array of benefits that include more than bottom-line metrics. Smart companies are capitalizing on this.

Absolutely, a hybrid business model in social enterprises does indeed bring a unique set of challenges. The inherent tension between social and financial objectives can lead to strategic dissonance, making it crucial to establish a clear, overarching mission that harmonizes these goals. This requires a nuanced understanding of how social impact and financial sustainability can mutually reinforce each other, rather than being seen as competing priorities. Management complexity is another critical issue. Leaders must be adept at navigating diverse stakeholder landscapes and balancing the needs and expectations of investors, beneficiaries, employees, and the wider community.

Historically, the business culture has established clear and definable metrics for a successful venture. But many social causes in the past have been more esoteric and less measurable. However, today's most successful hybrid business models find creative ways to measure their social enterprise's efforts, impact, and results through surveys, perceptual analysis of consumer reactions and preferences, and by putting an empirical metric to everything. You can see these metrics becoming more of the consumer conversation in categories such as energy use, meals served to the poor, opportunities for advancement, crime rates, jobs created, trees saved, carbon footprints in travel, and much more. And more of these metrics are on their way.

Another good example of a hybrid business model that creates a positive social impact with financial sustainability is the Los Angeles-based mission-driven food chain Everytable. This brand sells nutritious food in "food deserts" to make eating healthy on a budget affordable at every table in the country. The founder, Sam Polk, was a former hedge fund trader but has dedicated his life to helping deal with the alarming rates of obesity and diabetes in our country. Everytable achieves the previously impossible goal of serving tasty, delicious, and healthy meals to those who don't always have access, options, or incomes for healthy food.