A guest post by researcher, consultant, and colleague Florence Navarro.
In September the Unreasonable Institute’s blog ran a story about what I call the ‘succesful’ failure of Liga Masiva, http://unreasonable.is/closing-your-company-consciously/ a fair trade coffee company which sold directly from farmers in Latin America to North American customers. The article praised the company for its approach in being deliberate about its winding down. Being deliberate allowed the company to be honest with clients and investors, to be honest with its coffee growers and execute an organized end, and to recommend other roasters to their customers.
This article got me thinking. In its third year, the Unreasonable Institute’s program has accelerated about 70 social enterprises. Only 9 are no longer active. In Silicon Valley, it is commonly said ‘fail early and fail cheap;’ and commonly believed that an entrepreneur will fail at least twice before succeeding. There is even a conference, FailCon, now dedicated to studying failure in technology companies. Would it be possible to go beyond stories and anecdotes about failing mostly told by currently successful enrepreneurs? Can we look at many stories and find patterns? How can we even track companies which have closed and try to document that process? Can we help new companies with some diagnosis tools? Is there a time an entrepreneur or an investor can say: enough struggling, it is time to close.
Most of all, in the world of social entrepreneurship, which is still very new, what is the survival rate of companies? Is there any difference with the mainstream economy? Is there the same openness about failure? In a context where social and environmental impacts are as important as financial returns, how is failure defined? If we were to find diagnostic tools that could help start-ups identify whether to persevere, could we more effectively accelerate such companies and have a greater impact on the world? These are many questions, and each of them raises new ones. Over the next few months I will be diving into some of these questions. I am very excited to discover where they will lead.
If you are a for profit social entrepreneur who already has one or two closed companies under your belt, or an investor who has invested in such companies I would love you to hear from you.
Florence Navarro is passionate about building ecosystems which can support for profit companies who have embedded in their DNA social or environmental objectives. She has been a consultant to International Finance Corporation, William James Foundation, and Wildlife Conservation Society. Previously, she managed biodiversity protection and local governance programs for UNDP in Rwanda, Ethiopia and Poland. She has degrees from SAIS and Stanford Business School. You can reach Florence at florence at kichocheo dot com