Have you ever wondered why the different sectors exist, and why they are so different? You’re not alone, and understanding the differences is critical to success as a social entrepreneur. Each sector has its own psychology, motivation, opportunities, constraints and challenges. Drawing on research and interviews with leaders from each sector and a decade of practice, this article provides an overview of the sectoral differences and a summary of the implications for social entrepreneurs working across and between the sectors.
As our cultural context evolves, so do the role and relationships between the sectors meaning being able to work in partnership is more important than ever: “Cross-sector partnering between business, government, and non-profits will be the collaboration paradigm of the 21st century.” (James Austin, Harvard Business School). Partnerships between sectors of society are a way to integrate sectoral functions and co-create a better ‘system’ together, and a key ‘tool’ for social entrepreneurs wanting to enable change. Successful projects, collaborations and partnerships require some understanding of the differences between each sector, before you can start engaging, communicating or even integrating roles across sectors.
Most of the sources I’ve reviewed depict three sectors that comprise the core functions of society: the state sector (Government), the business sector and the civil society sector (CSOs). Some key characteristics of each sector are outlined in the table below, drawing on a functional definition of the sectors rather than ‘profit’ versus ‘non-profit’ definition. One of the most influential researchers and practitioners in partnerships, Steve Waddell, draws on a large body of work to explain that each sector has its own distinct logic and type of rationality and showed how most organisations are predominantly aligned with one type of sector. The different ‘logics’ of sectors give rise to different worldviews, values, concepts of time, and especially language. As an example of the difference in values, the managerial ‘operational frame’ of business emphasises the goals, and rewards entrepreneurial ways of achieving them, while for civil society it is often more important to have highly participatory processes to identify the goals and how to achieve them. The same contrasts can be drawn out for many of the functions and values and can help explain the source of conflicts, and traditional ‘cultural clashes’ between sectors. The attributes and functions of the respective sectors, and their different stakeholders give clues as to the challenges and opportunities for working together: e.g. business and CSOs might work together to achieve both healthy and wealthy communities.
For a social entrepreneur, this table is useful for understanding your own motivation and mode of operation:
- Do you think in terms of financial years or generations?
- Have you used money, laws or perhaps in-kind contributions to lead successful change projects in the past?
- Have your projects been controlled by members, owners, or the voters?
Once you’ve answered those questions for yourself or your own organisation, you can then consider what the perspective, values and structure of your partners and stakeholders may be. If they have different values and timeframes, then it makes a big difference to your communication, relationships, and perhaps even the logic of your project. One easy (though over-simplified) way to think of the differences is to think of the sectors as different types of people, each with their own personality traits, communication preferences and even sense of aesthetic: perhaps the civil sector is more ‘emotional’, government more ‘mental’ and business as more ‘physical’? One thing is for sure: be careful about the words you use, as some different words mean the same thing, but will get very different reactions from each sector e.g. ‘surplus’ vs ‘profit’, while other words mean profoundly different things in different contexts e.g. ‘enterprise’ or ‘return on investment’.
Pollinators Inc has successfully worked with these different ‘types of people’ or ‘systems of the economy’ in some of its recent projects, but not without some challenges. For example, developing CityHive meant we had to accomodate the very different perceptions of time of business and government: businesses can sign off on agreements and start work tomorrow as they are primarily only accountable to themselves, while government organisations are accountable to many other levels of government, voters, and politicians and must seek approval from virtually everyone, which takes considerably longer. Unfortunately in our dealings with some organisations, they seem to be unaware of how their own sector works: telling us to follow particular approval processes (which we did) while advising against engaging in the political realm which we suspect the ‘real’ decisions are made. Interestingly, at the opening of CityHive we invited guests from all three sectors to co-open the facility. In our conversations with each of these leaders, we realised that they all work across all sectors. This ‘dancing’ or ‘juggling’ across sectors seems to be more true and frequent leaders in smaller cities like Geraldton than it is in larger cities where perhaps it’s easier to ‘stick with your own’? Something to ponder.
Layered on top of the differences between sectors are further factors to be aware of which can make it even more complex, interesting, or in many cases actually easier:
- The role of the sectors in society e.g. business is increasingly taking on a government role on some issues and in some communities e.g. remote mining communities,
- There is frequent reference to a fourth sector emerging or ‘social economy’ e.g. as described at http://www.fourthsector.net/,
- The source of funding for the civil society sector is shifting from government to business, thereby increasing the responsibilities of business e.g. to be accountable and transparent about their processes for sponsorship and donations,
- There has been a rapid growth in the number of CSOs around the world and some see this as a direct response to the increasing influence of the business sector e.g. as documented in Paul Hawken’s ‘Blessed Unrest’ ,
- An increasing number of CSOs are developing their own subsidiary business arrangements in response to fiscal constraints e.g. CityHive is a social enterprise ‘business’ whose purpose includes generating a surplus Pollinators,
- Organisations of different sizes and stages of development are very different e.g. SMEs differ from corporates, and organisations like Interface are distinctly different in the complexity of their relationships to say…Monsanto!
The research I’ve been involved in has has revealed further insights into these and other dynamics, and you can read about the partnerships work here: http://partnerships4ssd.blogspot.com/ I’m continuing to learn as I put those learnings and others into practice through Pollinators Inc, consulting work and volunteer roles. Working across and between sectors literally requires you to change your ‘mind’ or wear different ‘hats’ from one email or conversation to the next. This is a great exercise in flexibility and non-attachment but can be exhausting.
So, if you have your own insights, references, cases or practical tips, please share and let’s make it as easy as possible to collaborate across sectors, while honouring their differences, towards and beyond sustainability!