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Entrepreneurship and the 3rd Sector – by Charles McLachlan

Charles McLachlan

Charles McLachlan

As my career developed in entrepreneurial commercial organisations, both large and small, I believed I also had something to offer the 3rd sector.  Certainly, it was easy to get invited to join trustees, act as a treasurer or get more involved in operational activity.  Here was a place that I felt confident I could contribute.  Surely, a shared commitment to an altruistic goal would be a powerful force for effective action.  If only they would adopt some of the pragmatic commercial disciplines of project management, financial control and clear lines of authority that I knew so well then we could really make a difference together!

My early attempts at introducing some of these disciplines were welcomed in principle but resisted in practice.  As my mentor used to say, “Charles, just because it makes sense, doesn’t mean that it is the right thing to do” and even more confusingly “Charles, just because it doesn’t make sense, it doesn’t mean it is not the right thing to do”.  I felt I must be missing part of the picture.  Then it clicked:

I had hardly imagined the challenge you face when:

  • 90% of your customers don’t pay you for your services
  • 90% of your staff hours are provide by individuals that cannot be motivated by pay or financial reward
  • your investors often have stronger opinions about how you do things and what you do than the actual outcomes delivered
  • available resources may be allocated in response to perceptions (internal or external) rather than a business case
  • too often absolute cost trumps value for money in spending decisions
  • individuals with power may have no responsibility and those with responsibility little power

As I began to fully understand the implications of these conflicting forces as compared to the relatively simple customer, supplier, investor, profit dynamic in the commercial sector, I developed a new respect for leaders of such organisations.  I also realised how much of what those leaders achieve could be applied with enormous power into commercial organisations.

The 3rd sector is often incredibly entrepreneurial.  With almost no resources, a community action group can initiate the transformation of an entire neighbourhood, for example.  The Jubilee Debt Campaign released billions of dollars of 3rd world debt to education and health care.  So what did I learn:

  • identify your stakeholders and ensure consultation and buy-in at every step of the way
    • in the commercial setting treat suppliers, staff, banks, customers and the community you operate in as stakeholders that crucially enable the outcome for investors
  • create extended networks of support and interest
    • both within the organisation and beyond enter into activities that engender support and interest in your organisation, its opinions, its values and its participation in the market and community
  • engage your staff as though they were volunteers
    • seek out what motivates them and what non-financial rewards they value
    • understand how they can believe in what the organisation is trying to achieve and their ability to directly contribute to it
  • recognise that it is more than the owners that are invested in your company
    • staff, suppliers, customers, banks and the community are potentially substantial investors financially, emotionally or morally in what you are doing
  • adopt the ability of the 3rd sector to deliver even when constrained by resources
    • rely on imagination, innovation, creativity
    • encourage experimenting and freedom of action
  • celebrate individual, group and organisational achievements
    • involve all relevant stakeholders in events to celebrate achievements

Does the commercial sector have nothing to offer the 3rd sector?  No, I still believe that many of the disciplines of the commercial sector are required.  But it is easy to squeeze out the power of the relationships that are the social capital underpinning the 3rd sector if you just turn the organisation into a more efficient financial machine.  And for us all, where financial resources are increasingly constrained, we should look to social capital as the entrepreneurial resource for leaders that want to re-invigorate Britain in the 21st century.

Charles McLachlan, Chairman of Academy Groups 27 & 28 and Entrepreneurs Boards 5, 25 & 26, is co-founder of the Transformation Development Partnership which works with individuals, teams, enterprises and communities that are committed journeying to building 4D Enterprises: enterprises bring impact economically, socially, environmentally and spiritually.
Charles has witnessed first hand the power of the Academy Community as he is both ACE Chairman and a Speaker for the organisation.  ACE is dedicated to inspiring the leaders of businesses to change their thinking, challenge their views and help them with their decision making abilities.  Leaders no longer need to feel isolated at the top.  For more information visit
© Charles McLachlan 2010

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