Leadership’s Next Frontier: Tri-Sector

This post by Erin Worsham, CASE Executive Director, originally appeared on The Huffington Post March 4, 2015.

Our team at CASE has studied social entrepreneurship and scaling social impact for over a decade. During that time, one thing that has been clear is that organizations striving to achieve impact at scale are most successful when they leverage the strengths of all sectors – nonprofit, for-profit and government.

Why is this true?

Because social problems are complex and require systems change to move the needle. Because social entrepreneurs can work for years, only to find that a policy change puts them out of business. Because companies can try to enter a new market, get the financial modeling right, but fail because they did not truly understand the community. Because there is a mismatch between the magnitude of the problems and the scale of existing solutions and only with the strength of all sectors can we hope to change that balance.

Therefore, we need individuals, teams, and institutions that are able to maneuver effectively across and between the nonprofit, for-profit and government sectors. These “Tri-Sector Leaders” must understand and command the unique language, motivations, and perspectives and know when and how to leverage the strengths of each sector. As the boundaries between sectors continue to blur — with the rise of B Corporations, hybrid social ventures, and governments co-investing in impact — these skills are becoming even more critical.

Michael Brown, CEO and cofounder of City Year, recently said to me, “I think tri-sector leadership is absolutely the cutting edge idea in social entrepreneurship.” He continued, “We need people that can move easily between [sectors] and say: what part of this problem can be solved at what time by what sector? How can we test ideas in the nonprofit sector using business skills and business leadership and then turn it into policy that can change not just a few lives but millions of lives?”

City Year — a nonprofit that places young people in high need public schools for a year of service — is a great example of tri-sector leadership. Brown and his co-founder, Alan Khazei, launched City Year in 1988 and have utilized the strengths of all sectors to scale their impact. For example, they partner with the for-profit sector to leverage strategic and capacity building advising as well as the in-kind and financial support needed for growth. City Year has also smartly leveraged the public sector. In what is now City Year lore, an invitation to visit City Year was accepted by then Governor Bill Clinton. Clinton was so inspired by what he saw that when he became President he launched AmeriCorps – a major source of funding for City Year and also a program that is putting 80,000 young people into public service every year.

So, what does it take to be a tri-sector leader?

According to Brown, the most critical skill is understanding the motivations of each sector. What is it that they need to accomplish and how can you help them achieve that? Within the private sector, sample motivations may include financial sustainability or engaging employees. Within the public sector, motivations may include being accountable and impactful with public dollars and aligning with interests of key constituencies.

Jonathan Reckford, CEO of Habitat for Humanity International, recently told us: “What is most important is understanding the culture and vocabulary in each sector. The management principles are not that different, but if you don’t understand the language and culture, you can make a lot of mistakes.” An example we discussed was the nuance of language around risk and return. “Risk” is easily accepted in the for-profit world so long as the expected return on investment is being maximized. In the public sector, cautious use of public funds means “risk” is a term better guarded against. And in the nonprofit sector, Reckford found that using the term “return on investment” raised concerns from stakeholders so instead he talks about “stewardship” of funding for greatest impact.

Understanding motivations, language, and culture are just some of the skills needed for effective tri-sector leadership. Matthew Thomas and Nick Lovegrove outline six skills in their article, “Triple-Strength Leadership,” ranging from contextual intelligence to building integrated networks. CASE’s Cathy Clark and co-authors Jed Emerson and Ben Thornley write about what they call “multilingual leadership” in their fantastic new book, “The Impact Investor.” They identify traits such as systems thinking, focus on ends versus means, and willingness to take risks, and highlight that these skills can be found at the level of the individual, team or institution. Have you thought about how you would recruit and train your team to ensure tri-sector thinking?

As social problems become more complex and lines between sectors continue to blur, we need a more rigorous and defined pathway for developing skills and building teams for effective tri-sector leadership. Our team is excited to continue to chart this path and welcome your comments on the skills and tools you think are most needed.